Company A has just discovered that the marginal revenue product generated by the last worker hired was $80 while the marginal factor cost was $85. What should Company A do?
A. Leave the level of production unchanged.
B. Increase the amount produced.
C. Reduce the amount produced.
D. Collect more information before making a decision.
Answer: C
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If a monopolist lowers its price
A) it lowers the barriers to entry. B) the quantity demanded increases. C) the quantity demanded remains the same. D) the quantity demanded decreases.
Suppose y is measured on the vertical axis, x is on the horizontal axis, and the various combinations of x and y are shown by a nonvertical straight line. Which of the following must be true?
a. There is a negative relation between x and y. b. There is a positive relation between x and y. c. There is a causal relation between x and y. d. If the value of x is known, the value of y can be determined. e. The value of y is independent of the value of x.
A pure monopoly firm will never charge a price in the inelastic range of its demand curve because lowering price to get into this region will:
A. increase total revenue, increase total cost, and decrease profit. B. increase total revenue, decrease total cost, and decrease profit. C. decrease total revenue, increase total cost, and decrease profit. D. decrease total revenue, total cost, and profit.
If the reserve ratio is 15 percent and commercial bankers decide to hold additional excess reserves equal to 5 percent of any newly acquired checkable deposits, then the relevant monetary multiplier for the banking system will be:
A. 4. B. 3½. C. 10. D. 5.