Sunshine's Organic Market sells organic produce. Assume that labor is the only input that varies for the firm. The store manager has determined that if she hires 5 workers, the store can sell 150 pounds of produce per day. If she hires 6 workers, the store can sell 170 pounds of produce per day. The store earns $4 for each pound of produce that it sells, and the manager pays each worker $60 per
day. Which of the following is not correct?
a. For the 6th worker, the marginal product is 20 pounds of produce per day.
b. For the 6th worker, the marginal revenue product is $20 per day.
c. The store earns a higher profit by employing 6 workers than by employing 5 workers.
d. Assuming no changes in either the daily wages paid to store workers or the price at which the store sells its produce, the firm would maximize profits by hiring a 7th worker so long as the store can increase its sales to at least 185 pounds per day.
b
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When businesses are cutting back production, then it probably true that
a. total spending is greater than total output. b. total output is greater than total income. c. total spending is less than total output. d. inventory levels are decreasing.
Economists tend to see taxing an action that produces a negative externality as:
A. the second best solution possible, but often unattainable. B. the best solution possible and often the most attainable. C. the best solution possible, but often unattainable. D. the second best solution possible but one that is attainable.
When there is a change in the quantity demanded it means that:
A. the hours the customer can buy products each day have increased. B. the number of products in inventory have increased. C. the quantity a consumer is willing to buy changes when the price changes. D. the selling price of the products has not changed.
Monopolistically competitive markets are like perfectly competitive markets because in both markets firms:
A. have some control over price. B. face substantial barriers to entry. C. face a large number of competitors. D. have no control over price.