Economics Q57

57A firm plans to expand production by 500 units. The marginal product per day for one additional unskilled laborer is 250 units and one additional skilled worker is 500 units. Wages per day are £150 for an unskilled labor and £280 for a skilled worker. The firm should hire:

Option : B
Explanation : The firm can hire two unskilled workers for 150 x 2 = 300 or one skilled worker for 280. The firm will minimize costs at the higher level of production by hiring one additional skilled worker at a total cost of 280.

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