Diane's Auto World installs tires on automobiles, light trucks, and sport utility vehicles. She is a profit-maximizing business owner whose firm operates in a competitive market. The marginal cost of installing a tire is $10. The marginal productivity of the last worker that Diane hired was 2 tires per hour. What is the maximum hourly wage that Diane was willing to pay the last worker hired?
Tap an option to check your answer.
Checking your account…
Factor markets and income distribution has come up 55 times in 6 exams since 2006.
This question is on Derived demand and marginal revenue product, part of Factor markets and income distribution in Microeconomics.
Why firms demand inputs: the value of what the last unit adds to output or revenue.
TestStop has 18 past-paper questions on this subtopic.
Question from the JNU SSS 2019 paper. Solutions are TestStop's own. Not affiliated with or endorsed by any examination authority.