If a firm hires workers up to the point where the value of their marginal product equals their wage, then the firm is
a. minimizing labor costs.
b. maximizing profit.
c. maximizing the MP of labor.
d. minimizing average costs.
b. maximizing profit.
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Starting from long-run equilibrium, a large decrease in government purchases will result in a(n) ________ gap in the short-run and ________ inflation and ________ output in the long-run.
A. expansionary; lower; potential B. expansionary; higher; potential C. recessionary; lower; potential D. recessionary; lower; lower
Which of the following would lead to a decrease in the supply of crude oil?
A) Favorable tax breaks for oil companies B) An increase in the demand for crude oil C) An increase in the price of gasoline D) Both A and C. E) None of the above.
The optimal hiring rule is to employ labor up to the point where:
a. wage = MFC. b. wage = MP. c. wage = MR d. wage = MRP e. wage = TWC.
If a firm doubles its resources and generates an output level which is more than double, it is said to be experiencing:
a. economic fluctuations. b. recession. c. diseconomies of scale. d. increasing marginal returns to a factor. e. economies of scale.