Chapter 14, Problem 1WNG

### Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406

Chapter
Section

### Microeconomics

13th Edition
Roger A. Arnold
ISBN: 9781337617406
Textbook Problem

# Determine the appropriate numbers for the lettered spaces:

To determine

Identify the values of wage rates, total labor cost (TLC), and marginal factor cost (MFC).

Explanation

Total labor cost can be calculated using the formula given below:

Total labor cost=Wage rate ×Workers        (1)

Marginal factor cost can be calculated using the formula given below:

Marginal factor cost=Changes in total labor costChanges in workers        (2)

Since the wage rate paid for 3 workers is $12.20 and the wage rate paid for 2 workers is$12.10, the difference between wage rates is $0.10 (12.20-12.10), when an additional labor is hired. Thus, the wage rate at point A can be calculated as follows: Wage rateA=Wage rateBWage rate difference=$12.10$0.10=$12.10$0.10=$12

Thus, at point A, the wage rate is $12. The wage rate at point B can be calculated as follows: Wage rateA=Wage ratec+Wage rate difference=$12

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