If the wage rate paid to a flour mill worker is $75 and the marginal product of a mill worker is 50 pounds of flour, this means that for each additional dollar spent on labor, there is a gain of________ pounds of flour.

Question

Quizplus · Accepted Answer

To find the gain in pounds of flour for each additional dollar spent on labor, we need to calculate the marginal product of labor (MPL), which is the additional output produced by adding one unit of labor. We are given that the MPL is 50 pounds of flour - this means that each additional worker hired will produce an additional 50 pounds of flour.

To calculate the gain in output from an additional dollar spent on labor, we need to divide the marginal product of labor by the wage rate.

Gain in output per dollar = MPL/wage rate 
= 50/75 
= 0.67

Therefore, for each additional dollar spent on labor, there is a gain of 0.67 pounds of flour. The correct answer is (D).

If the Wage Rate Paid to a Flour Mill Worker