Suppose that a firm has only one variable input, labor, and firm output is zero when labor is zero. When the firm hires 6 workers it produces 90 units of output. Fixed cost of production are $6 and the variable cost per unit of labor is $10. The marginal product of the seventh unit of labor is 4. Given this information, what is the total cost of production when the firm hires 7 workers?
$66, $76, $906, $946
76
To find the total cost of production when the firm hires 7 workers, we need to calculate the variable cost and add it to the fixed cost.
First, let's calculate the variable cost:
Variable cost per unit of labor = $10
Number of workers = 7
Variable cost = Variable cost per unit of labor * Number of workers
Variable cost = $10 * 7 = $70
Next, let's calculate the total cost by adding the fixed cost to the variable cost:
Fixed cost = $6
Total cost of production = Fixed cost + Variable cost
Total cost of production = $6 + $70 = $76
Therefore, the total cost of production when the firm hires 7 workers is $76.