Frank's Burgers employs workers in a competitive market. It currently has 15 employees. The marginal revenue product of the 15th worker hired is $8.50 per hour. The market equilibrium wage is $10 per hour
Is this firm maximizing profit? Explain.
No, the firm is not maximizing profit. A profit-maximizing firm will add labor as long as the marginal revenue product of labor equals or exceeds the market wage. Therefore, the firm should not have hired the 15th worker.
You might also like to view...
Today, U.S. government spending on entitlements represents ________ of the total federal budget
A) about 10 percent B) less than 25 percent C) nearly 60 percent D) nearly 90 percent
A government is running a budget surplus if:
A. government revenue is less than government spending. B. imports exceed exports. C. government revenue exceeds government spending. D. exports exceed imports.
An expansionary monetary policy may be less effective than a restrictive monetary policy because:
A. the Federal Reserve Banks are always willing to make loans to commercial banks that are short of reserves. B. fiscal policy always works at cross purposes with an expansionary monetary policy. C. changes in exchange rates complicate an expansionary monetary policy more than they do a restrictive monetary policy. D. commercial banks may not be able to find good loan customers.
When all markets are in simultaneous equilibrium, the general equilibrium condition has been satisfied.
Answer the following statement true (T) or false (F)