The marginal productivity principle says that a profit-maximizing firm should
a. hire capital until its marginal product is zero.
b. hire labor until another worker costs more to hire than he can earn for the firm.
c. hire the quantities of capital and of labor at which their marginal products are equal.
d. hire capital until its marginal product is negative.
B
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In order for a Pigouvian subsidy to be efficient, the amount it costs the government to implement the subsidy must be less than the economic value of the additional externality benefits created by the subsidy.
Answer the following statement true (T) or false (F)
The above diagram shows the cost curves for a perfectly competitive wheat farmer. At what price does the wheat farmer shut down?
What will be an ideal response?
The manager of a large luxury hotel chain is currently negotiating a four year contract with a linens supplier. The linens company will supply fresh laundered bedding and towels to the hotel over a four year period; however, the hotel chain can ends its contract with the linens company at the end of the first, second, or third years if the linens company does not supply quality linens. What can
the manager of the hotel chain do to avoid the end-game problem? A) Inform the linens company that the hotel chain will nominate them for a linens industry award if the linens company provides quality linens all four years. B) Pay the linens company in full at the beginning of the first year. C) Pay the linens company in full after the second year. D) Pay the linens company in full at the end of the third year.
Which of the following factors would not be considered by a technical analyst when predicting a firm's stock price?
a. a large drop in the stock price yesterday b. a "head and shoulders" pattern in the recent movements of the stock's price c. the likely success of the firm's new product line d. the probable behavior of other buyers and sellers of the stock e. a large jump in the stock's price last week