If you hire me at $10 an hour, but have to pay $12 an hour to attract a second laborer to work with me, I will feel unfairly treated and will quit working for you. You then will have only one worker anyway, so you might as well have kept me at $10 an hour. To prevent this problem, you hire us both at $12 each. This means that your marginal factor cost (MFC) for a second worker is

If you hire me at $10 an hour, but have to pay $12 an hour to attract a second laborer to work with me, I will feel unfairly treated and will quit working for you. You then will have only one worker anyway, so you might as well have kept me at $10 an hour. To prevent this problem, you hire us both at $12 each. This means that your marginal factor cost (MFC) for a second worker is

12:59

If you hire me at $10 an hour, but have to pay $12 an hour to attract a second laborer to work with me, I will feel unfairly treated and will quit working for you. You then will have only one worker anyway, so you might as well have kept me at $10 an hour. To prevent this problem, you hire us both at $12 each. This means that your marginal factor cost (MFC) for a second worker is



a. $12.
b. $24.
c. $10.
d. $14.


Answer: d. $14.


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