Final answer:
The total output produced by 5 units of labor, based on their given marginal products, is 400 units, which is not one of the options provided in the question. Therefore, the correct answer is not listed among the options.
Step-by-step explanation:
The question involves calculating the total output produced by the first 5 units of labor based on the given marginal product of each unit. The marginal product of labor is the additional output generated by employing one more unit of labor. The total output is the sum of the marginal products of each of the first 5 units of labor:
- 120 from the first unit of labor
- 105 from the second unit
- 85 from the third unit
- 60 from the fourth unit
- 30 from the fifth unit
Adding these up gives us a total output of 400 units. As such, none of the provided options (30, 80, or 90 units of output) are correct. The correct option for the total output produced by 5 units of labor is 400 units.
Furthermore, looking into business concepts related to labor economics, we find that the value of the marginal product (VMP) is essential for businesses in order to make decisions regarding employment levels. In perfectly competitive markets, a firm will continue to hire more labor until the point where the value of the marginal product equals the market wage rate.