Company B has just discovered that the marginal revenue product generated by the last worker hired was $25 while the marginal factor cost was $25. What should Company B do?
A) Leave the level of production unchanged.
B) Increase the amount produced.
C) Reduce the amount produced.
D) Collect more information before making a decision.
Answer: A
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Suppose a monopolist produces output where total revenue is maximized. At that output, the price elasticity of demand for the monopolist's output is:
A. equal to one. B. greater than or equal to one. C. less than one. D. impossible to determine without data.
The MPS is
A. .9.
B. .8.
C. .7.
D. .6.
Given the information that follows, how much are (a) accounting profits and (b) economic profits? Sales, $750,000; explicit costs, $450,000; return you could have earned by investing your money elsewhere, $50,000; wages that you and your family members could have earned doing the same work for another firm, $70,000.
What will be an ideal response?
An individual wheat farmer produces wheat in a perfectly competitive market. A decrease in the market demand for wheat will cause the farmer's marginal revenue to ________ and his profit-maximizing level of output to ________.
A. increase; increase B. increase; decrease C. decrease; increase D. decrease; decrease