The Bulldog Beanery Coffee Shop is a perfectly competitive firm currently employing 30 workers. The marginal revenue product of the 30th worker is $7/hour. The wage rate is $8/hour. To increase profits, this firm should
A. decrease employment until the MRP of labor equals $8.00.
B. increase the price of coffee so that the marginal revenue product increases to $8.00 per hour.
C. increase employment until the MRP of labor equals $8.00.
D. continue hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired.
A. decrease employment until the MRP of labor equals $8.00.
You might also like to view...
Which of the following statements best describes the production and allocation of resources after the United States entered World War II?
a. Government spending as a percentage of GNP during this period never exceeded the maximum level at the height of the Depression under Roosevelt's New Deal policies. b. Production shifted out closer to the production possibilities frontier, primarily as a result of technical change. c. Production shifted out toward the production possibilities frontier, primarily as a result of underutilized resources being utilized. d. Greater production of goods to support the war involved nominally higher incidents of disabling injuries in the workplace, yet not increases in the rates of disabling injuries.
Ashley decreases her consumption of Good A after the price of Good B decreased. For Ashley
A) Good A and Good B are substitutes. B) Good A and Good B are complements. C) Good A is an inferior good. D) Good B is an inferior good.