Exhibit 10-5 A perfectly competitive labor market
 
?
Quantity of Labor
(thousands)
Marginal Revenue Product
Wage Rate 5 $25.00$  5.00  10 20.0010.00 1515.0015.00 2010.0020.00 255.0025.00?
?
 In Exhibit 10-5, when the marginal revenue product is $20.00, firms should

A. continue hiring workers.
B. stop hiring workers.
C. start firing workers.
D. pay a wage above $15.00 to its workers


Answer: A

Economics

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