An increase in the marginal factor cost of labor will
A) lead to an increase in the quantity demanded of labor.
B) induce a firm to hire fewer workers.
C) lead to an increase in the value of an additional worker.
D) cause the value of the marginal product of labor to increase.
Answer: B
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In long-run competitive equilibrium, a firm that owns factors of production will have an
A) economic profit = $0 and accounting profit > $0. B) economic profit > $0 and accounting profit = $0. C) economic and accounting profit = $0. D) economic and accounting profit > $0. E) economic and accounting profit can take any value.
Refer to Scenario 13.2 below to answer the question(s) that follow. SCENARIO 13.2: The government of Stratospheria is currently inviting investors to bid for the exclusive right to provide cable television service to its residents. The market demand for this service is P=55-0.01Q, where Q is the number of households that would subscribe to the cable service and P is the monthly fee charged to the subscribers. The associated marginal revenue curve is MR=55-0.02Q. Fun Cable Company is interested in bidding for the right to provide cable service in Stratospheria. It has a constant average and marginal cost of $5 for providing cable service to each household.Refer to Scenario 13.2. What is the most Fun Cable Company would bid for the franchise?
A. $0 B. $62,500 C. $75,000 D. $112,500