If the MPP of an additional unit of labor is 4 units per hour,product price is constant at $9 per unit,and the wage rate is $35 per hour,then:

Question

Quizplus · Accepted Answer

The MPP (marginal physical product) of an additional unit of labor is 4, which means that the firm can produce 4 more units of output per hour by adding one more worker. Since the product price is constant at $9 per unit, an additional unit of labor will generate extra revenue of $36 (4 units × $9) for each hour of work.

The wage rate is $35 per hour, which means that the cost of employing an additional worker is $35 per hour. Since the additional worker will generate extra revenue of $36 per hour, it is profitable to hire that worker.

Therefore, the best choice is B.

If the MPP of an Additional Unit of Labor Is