Suppose a firm is a price searcher in the product market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40 . The firm produces 100 units of the product, which sell for a price of $10 each. This firm is

a. maximizing profit when it hires four workers
b. not maximizing profit and should hire more workers to increase profit
c. not maximizing profit and should hire fewer workers to increase profit
d. maximizing profit when it produces 100 units of the product
e. not maximizing profit when it produces 100 units of the product and should increase production to increase profit

C

Economics

You might also like to view...

Discuss the correct and incorrect economic analysis in the following statements

"If a disease kills a large number of turkeys, the supply of turkeys will decrease. This will result in a price increase, which will then cause the supply of turkeys to increase."

Economics

A criticism of the monetarist autonomous spending variable is that

A) some types of autonomous spending do not affect aggregate demand. B) some types of autonomous spending affect aggregate demand before the spending occurs. Some types of autonomous spending affect aggregate demand when they occur. C) some types of autonomous spending affect aggregate demand only long after they occur. D) Keynesians do not think that autonomous spending affects aggregate demand.

Economics