Suppose a firm is hiring 20 workers at a wage rate of $60.The average product of labor is 30,the last worker added 12 units of output,and total fixed cost is $3,600.What is marginal cost?
A)$.20
B)$5
C)$240
D)$720
E)none of the above

Question

Quizplus · Accepted Answer

Marginal cost (MC) is calculated as the change in total cost divided by the change in quantity of output. The change in total cost is the wage of the last worker, which is $60. The change in output is the marginal product of the last worker, which is 12 units. Therefore, MC = $60 / 12 = $5.

Suppose a Firm Is Hiring 20 Workers at a Wage