In a printing press, seven workers each receive Rs 450 per day. A proposed eighth worker demands Rs 500 per day, and if hired, all eight workers must be paid Rs 500 per day. What is the marginal resource cost of hiring the eighth worker?

Introduction / Context:
Marginal resource cost, also known as marginal factor cost, is a concept used in the theory of labour and factor markets. It measures the additional cost to a firm when it hires one more unit of a factor, such as an extra worker. In a labour market with a uniform wage for all similar workers, hiring another worker sometimes requires the firm to raise the wage for existing workers as well. This question checks whether the learner can correctly compute marginal resource cost by accounting for the increase in the total wage bill, not just the wage of the new worker.

Given Data / Assumptions:
• Initially, there are seven workers in the printing press. • Each of these seven workers is paid Rs 450 per day. • An eighth worker demands a wage of Rs 500 per day. • If the eighth worker is hired, all eight workers must be paid Rs 500 per day. • We must find the marginal resource cost of the eighth worker.

Concept / Approach:
Marginal resource cost is defined as the change in total cost of employing the factor when one more unit is hired. In this case, the factor is labour. Because the hiring of the eighth worker forces a wage increase for all workers, we must compare the total wage bill before and after the new worker is hired and take the difference. It is not enough to look only at the wage of the eighth worker itself. The additional cost to the firm includes the higher wage paid to the original seven workers as well.

Step-by-Step Solution:
Step 1: Compute the initial total wage bill. There are seven workers, each paid Rs 450, so initial wage bill equals 7 * 450. Step 2: Calculate 7 * 450 which equals Rs 3150 per day. Step 3: After hiring the eighth worker, the wage for each worker becomes Rs 500 per day, and the total number of workers becomes eight. Step 4: Compute the new total wage bill as 8 * 500, which equals Rs 4000 per day. Step 5: Marginal resource cost is the change in the total wage bill, so subtract the original wage bill from the new one: 4000 minus 3150. Step 6: This difference is Rs 850, so the marginal resource cost of the eighth worker is Rs 850 per day.

Verification / Alternative check:
To check the result, consider an alternative breakdown. The eighth worker brings in a direct wage cost of Rs 500. In addition, each of the seven existing workers gets a wage rise of Rs 50 per day, since their wage goes from Rs 450 to Rs 500. The extra cost from wage increases to existing workers is 7 * 50, which is Rs 350. Adding the direct cost of the new worker, 500 plus 350 equals Rs 850. This matches the earlier calculation based on total wage bills, confirming that the marginal resource cost is Rs 850.

Why Other Options Are Wrong:
Rs 50 is only the increase in wage per worker, not the total increase in the wage bill for the firm due to the collective wage change.
Rs 400 would be the difference between 8 * 450 and 8 * 500 or some other incorrect partial calculation, not the change between the correct total wage bills before and after hiring.
Rs 100 has no clear relation to either the wage change or the total wage bills and therefore cannot represent marginal resource cost in this situation.

Common Pitfalls:
A major pitfall is to assume that marginal resource cost is always equal to the wage of the last worker hired. That is true only when the firm can hire additional workers at a constant wage without affecting the wage paid to existing workers. In markets where wages must rise to attract new workers, the marginal resource cost exceeds the wage rate. Understanding this difference is important, especially when studying monopsony power or upward sloping labour supply curves faced by a firm.

Final Answer:
The marginal resource cost of hiring the eighth worker in this printing press is Rs 850 per day.