(Table: Workers and Output) Use Table: Workers and Output.After graduation,you achieve your dream of opening an art shop that specializes in selling mud statues.You pay $10 per day on a loan from your uncle,regardless of how much you produce.You also pay $10 per day to each of the workers who you hire to make the mud statues.How many workers should you hire to minimize your marginal cost?

A) two
B) three
C) four
D) five

Question

Esteven Hernandez · Accepted Answer

Final Answer : A, Explanation :  The marginal cost is the change in total cost divided by the change in output. In this case, the total cost is $10 per day for the loan and $10 per day for each worker. The output is the number of mud statues produced. The marginal cost is therefore $10 per statue for the loan and $10 per statue for each worker. To minimize the marginal cost, you should hire as few workers as possible. The correct answer is therefore A: two.

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