A firm pays the same wage rate to all its workers. At present, 10 workers are employed at $50 per day. Wages are subsequently raised to $55 per day in order to attract an extra worker. Thus, the marginal labor cost per day is
A) $5.
B) $10.
C) $55.
D) $105.

Question

Quizplus · Accepted Answer

The marginal labor cost is the additional cost incurred by hiring one more worker. Initially, the total wage cost for 10 workers is $500 (10 workers x $50). After hiring the 11th worker at $55 per day, the total wage cost becomes $605 (11 workers x $55). The marginal labor cost is the increase in total wage cost, which is $605 - $500 = $105.

A Firm Pays the Same Wage Rate to All Its