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Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383

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BuyFindarrow_forward

Economics (MindTap Course List)

13th Edition
Roger A. Arnold
ISBN: 9781337617383
Textbook Problem

Determine the appropriate numbers for the lettered spaces:

images

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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