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

Long-run costs and economies of scale — practice question

A firm faces perfect competition in both the product and factor markets, while labour is its only variable factor input. On the diagram, line JK represents the connection between the marginal physical product of labour and hours worked. (Graphic: line JK plots marginal physical product values of 10, 8, 6, 4, 2, 0 against 0–5 thousand hours) If the marginal revenue of the product equals $1.60, the firm employs 3000 hours of labour. What is the wage per hour?

  • A$0.40
  • B$2.40
  • C$5.60
  • D$6.40

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