A manager of a small company makes the following statement – "We need to keep hiring additional workers up to the point where the marginal productivity of the last worker we hire is at its maximum
This way we can maximize the total productivity of the firm." Critically evaluate this statement.
This statement is false. The total product will be maximized when marginal productivity is zero. Even if the firm continues to hire workers long after the one with the maximum marginal productivity the firm will still see an increase in overall productivity if the additional workers still have a positive marginal productivity.
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A buyer’s response to a change in income is an example of a “change in demand.”
Answer the following statement true (T) or false (F)
The market will overproduce goods that have external costs because
A. Producers experience lower costs than society. B. Producers cannot keep these goods from consumers who do not pay, so they have to produce greater amounts. C. The government is not able to produce these goods. D. Producers experience higher costs than society.