Question

You operate a car detailing business with a fixed amount of machinery (capital), but you have recently altered the number of workers that you employ per hour. Two employees can generate an average product of 7 cars per person in each hour, and five employees can generate an average product of 3 cars per person in each hour. If the wage is $24 per hour, what is the marginal cost as you increase the labor from Two to five employees?

Answer 1

$24

Step-by-step explanation:

Marginal cost is the additional cost generated by producing an additional unit of labour.

Marginal cost is equal to the wage that would be paid to one more unit of labour hired. this is $24