Question

Austin's total fixed cost is $4,200. austin employs 30 workers and pays each worker $160. the average product of labor is 2, and the marginal product of the last worker hired is 8. what is the marginal cost of the last unit produced by the last worker austin hired?

Answer 1

$20

Step-by-step explanation:

Given that,

Total fixed cost = $4,200

Number of workers employs = 30

Wages = $160 per worker

Average product of labor = 2

Marginal product of last labor hired = 8

Marginal cost refers to the additional cost that has occurred to produce the additional unit of a commodity.

Here, from the given information, we can calculate the marginal cost of the last unit produced by the last worker is as follows:

= Wages per worker ÷ Marginal product of last labor hired

= $160 ÷ 8

= $20