7 workers work in a printing press. Each gets paid Rs 450 per day. The 8th worker demands Rs 500 per day. If this worker is hired then all other workers must be paid Rs 500. The marginal resource (labour) cost of the 8th worker is ________.
- ARs 50
- BRs 850
- CRs 400
- DRs 100
Solution & Step-by-step Explanation
Marginal Resource Cost (MRC) or Marginal Labour Cost is the additional cost incurred by employing one more unit of labour.
Total Cost with 7 workers=7×450=Rs 3150
When the 8th worker is hired, all 8 workers must be paid Rs 500 per day.
Total Cost with 8 workers=8×500=Rs 4000
Marginal Resource Cost=Total Cost
8
−Total Cost
7
Marginal Resource Cost=4000−3150=Rs 850
Total Cost with 7 workers=7×450=Rs 3150
When the 8th worker is hired, all 8 workers must be paid Rs 500 per day.
Total Cost with 8 workers=8×500=Rs 4000
Marginal Resource Cost=Total Cost
8
−Total Cost
7
Marginal Resource Cost=4000−3150=Rs 850