Suppose at the current level of labor used, MRP = $20 and MFC = $25. To maximize profits, the firm should
A) hire more labor.
B) reduce the level of labor.
C) maintain the current level of labor.
D) expand production.
Answer: B
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An example of a situation in which the social costs are greater than the private costs would be
A) a new restaurant takes business away from an established restaurant. B) hand-held calculators putting slide rule manufacturers out of business. C) when a member of a rock band's ability to hear deteriorates from performing in so many loud concerts. D) a physician who cannot examine patients with a stethoscope in an examination room adjacent to an airport.
Under the Bertrand Model of oligopoly
a. output will be greater than under monopoly but less than competitive output. b. output will be less than under monopoly but greater than competitive output. c. output will be equal to competitive output. d. output will be equal to monopoly output.