Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week.
-Refer to Figure 18-1.Suppose the firm sells its output for $10 per unit,and it pays each of its workers $400 per week.When the number of workers increases from 4 to 5,

Question

Figure 18-1.On the graph,L represents the quantity of labor and Q represents the quantity of output per week. 
-Refer to Figure 18-1.Suppose the firm sells its output for $10 per unit,and it pays each of its workers $400 per week.When the number of workers increases from 4 to 5,

Quizplus · Accepted Answer

According to the graph, when the number of workers increases from 4 to 5, the quantity of output per week increases from 16 to 20. Therefore, the marginal product of labor is 4 units (20-16). If the firm sells its output for $10 per unit, then the marginal revenue is $10 per unit. The additional cost of hiring one more worker is $400, so the marginal cost is $400. Therefore, the value of the marginal product of labor is $450 (4 x $10 x 5) and the marginal cost per unit of output is about $8.89 ($400/4.5).