Question

Microeconomics

Posted about 2 months ago

```
A single firm in Aluminum Valley hires computer coders. The market supply of computer coder labor is given here.
\begin{tabular}{lll}
Wage (per hour) & Quantity of labor supplied & Total cost of labor \\
\hline$\$ 10$ & 1 & $\$ 10$ \\
$\$ 20$ & 2 & $\$ 40$ \\
$\$ 30$ & 3 & $\$ 90$ \\
$\$ 40$ & 4 & $\$ 160$ \\
$\$ 50$ & 5 & $\$ 250$
\end{tabular}
What is the marginal factor cost of the fifth worker?
Choose 1 answer:
(A) $\$ 10$
(B) $\$ 250$
(C) $\$ 70$
(D) $\$ 90$
(E) $\$ 50$
```

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Answer from Sia

Posted about 2 months ago

Solution

a

Marginal Factor Cost (MFC) Definition: The Marginal Factor Cost (MFC) is the additional cost incurred by a firm when it hires one more unit of a factor of production, in this case, labor

b

Calculation of MFC: To find the MFC of the fifth worker, we need to calculate the change in total cost of labor when the quantity of labor increases from 4 to 5 workers

c

Formula Application: The formula for MFC is $MFC = \Delta TC / \Delta L$, where $\Delta TC$ is the change in total cost and $\Delta L$ is the change in the quantity of labor

d

Data Extraction: From the table, the total cost of labor for 4 workers is $160, and for 5 workers, it is$250

e

Calculation: $\Delta TC = 250 - 160 = 90$ and $\Delta L = 5 - 4 = 1$. Therefore, $MFC = 90 / 1 = 90$

Answer

$90

Key Concept

Marginal Factor Cost (MFC)

Explanation

The Marginal Factor Cost is the additional cost incurred by hiring one more worker. In this case, the MFC of the fifth worker is calculated by finding the difference in total cost of labor when the number of workers increases from 4 to 5.

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