A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40 . The firm produces 100 units of the product, which sell for a price of $10 . This firm is
a. maximizing profit when it hires four workers
b. not maximizing profit and should hire more workers to increase profit
c. not maximizing profit and should hire fewer workers to increase profit
d. not maximizing profit when it produces 100 units of the product and should increase production to increase profit
e. not maximizing profit when it produces 100 units of the product and should decrease production to increase profit
A
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Because of the problem of adverse selection,
A. low-risk individuals may have a hard time finding insurance worth buying. B. high-risk individuals may have a hard time finding insurance worth buying. C. everyone is typically charged a lower premium. D. individuals who buy insurance act more recklessly.
A portion of a worker's earnings is economic rent if the worker
A. has skills that make him more productive than an unskilled worker. B. has been on the job for at least a year. C. would accept a small reduction in pay without quitting. D. was the last person hired at the going wage rate.
Three variables are related and two of them are plotted in a figure. If the variable that is not measured on either the x-axis or the y-axis changes, then there is
A) a movement along the drawn curve. B) no impact on the curve because the variable is not measured on either of the axes. C) a shift in the curve. D) either a shift in the curve or a movement along the curve, but more information is needed to determine which. E) None of the above answers is correct.
The demand curve facing a perfectly competitive firm is
A. downward sloping. B. perfectly inelastic. C. infinitely elastic. D. perfectly elastic.