Refer to the table at right. If the price of the product is? $1.50, and the marginal factor cost of an additional unit of an input is? $105, how many units of labor should be? hired?
A. 12
B. 11
C. 14
D. 13
Ans: D. 13
The firm hires at VMPP=MFC
MFC=marginal factor cost =additional input cost=105
marginal product of n th worker =total output of n workers - total output of n-1 workers
MPP(n)=TPP(n)-TPP(n-1)
MPP(11)=600-500=100
MPP(12)=690-600=90 and so on
VMPP=MPP*price
VMPP(11)=100*1.5=150
VMPP(12)=90*1.5=135 and so on
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