Question

A dressmaker uses labor and capitai (sewing machines) to produce dresses in a competitive market. 5 uppose the last unit of labor hired cost $1,000 per month and increased output by 300 dresses. The last unit of capital hired (rented) cost $500 per month and increased output by 450 dresses. The marginal product per dollar spent on the last unit of labor is ?

Answer 1

The marginal product per dollar spent on the last unit of labor is 0.3 dresses per dollar.

Step-by-step explanation:

The marginal product per dollar spent on the last unit of labor can be calculated by dividing the increase in output by the cost of hiring the labor. In this case, the last unit of labor hired cost $1,000 per month and increased output by 300 dresses. Therefore, the marginal product per dollar spent on labor is:

Marginal product per dollar spent on labor = Increase in output / Cost of labor
= 300 dresses / $1,000
= 0.3 dresses per dollar

So, the marginal product per dollar spent on the last unit of labor is 0.3 dresses per dollar.