Use the following to answer questions:
-(Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. How many workers should you hire to minimize your marginal costs?
A) two
B) three
C) four
D) five

Question

Use the following to answer questions: 
-(Table: Workers and Output) Look at the table Workers and Output. After graduation you achieve your dream of opening an art shop that specializes in selling mud statues. You pay $10 per day on a loan from your uncle, and regardless of how much you produce, you pay $10 per day to each of the workers who make the mud statues. How many workers should you hire to minimize your marginal costs?
A) two 
B) three 
C) four 
D) five

Quizplus · Accepted Answer

The marginal cost is the change in total cost divided by the change in output. In this case, the total cost is the sum of the loan payment and the wages paid to the workers. The loan payment is fixed at $10 per day, so it does not affect the marginal cost. The wages paid to the workers are $10 per day per worker, so the marginal cost is $10 per worker. To minimize the marginal cost, you should hire as few workers as possible. In this case, you should hire two workers.

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