Economics 9708 · AS & A Level · Long-run costs and economies of scale

Long-run costs and economies of scale — practice question

A company operates in perfect competition in both product and factor markets, with labour as the only variable factor input. In the diagram, line JK represents the link between the marginal physical product of labour and the man-hours hired. If the hourly wage is $3.20, the firm hires 4000 man-hours per day. What is the price of the product?

  • A$1.60
  • B$2.00
  • C$3.20
  • D$6.40

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