If a firm must pay a daily wage of $35 to hire 11 workers and a daily wage of $40 to hire 12 workers, its marginal resource cost of hiring the 12th worker is $40.

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Quizplus · Accepted Answer

The marginal resource cost (MRC) of hiring the 12th worker is not simply the wage of the 12th worker ($40), but the total additional cost incurred by hiring the 12th worker. To calculate MRC, you consider the difference in total wage costs before and after hiring the 12th worker. Initially, for 11 workers, the total wage cost is $35 * 11 = $385. After hiring the 12th worker at $40, the total wage cost for 12 workers is $40 * 12 = $480. The MRC is the change in total wage cost, which is $480 - $385 = $95, not just the wage of the 12th worker.

If a Firm Must Pay a Daily Wage of $35