Question

If a worker can produce 20 units of output which can be sold for $4 per unit, what is the maximum wage that firm should pay to hire this worker? $80 minus the firm's profit markup It depends on what the going wage rate is in the labor market. $80 There is insufficient information to answer the question.

Answer 1

$80

Step-by-step explanation:

Maximum wage is the maximum amount of money that a firm can pay its worker based on what the worker can produce and generate as revenue to the firm.

Given that the worker can produce 20 units of output which can be sold for $4 per unit, The maximum wage that the firm can pay the worker = output × price per unit output.

Maximum wage the firm can pay the worker = 20 units × $4 per unit = $80