Refer to the following graph.The price of labor is $3 per unit: How many units of labor should a firm use in order to produce 100 units of output at the least cost?
A)5 units of labor
B)10 units of labor
C)15 units of labor
D)20 units of labor

Question

Refer to the following graph.The price of labor is $3 per unit:  How many units of labor should a firm use in order to produce 100 units of output at the least cost?
A)5 units of labor 
B)10 units of labor 
C)15 units of labor 
D)20 units of labor

Quizplus · Accepted Answer

To produce 100 units of output at the least cost, we need to find the point where the isoquant for 100 units intersects with the isocost line (where the cost of labor is $300). This can be found by drawing a perpendicular line from the point where the isocost line intersects with the 100 unit isoquant to the x-axis. The point of intersection is approximately 10 units of labor. Therefore, the firm should use 10 units of labor to produce 100 units of output at the least cost.

Refer to the Following Graph