A profit maximizing firm in any type of market for its output would hire the quantity of labor at which
a. the marginal cost of output is equal to the marginal revenue product of labor, where MRP is sloping downward.
b. the wage rate is equal to marginal revenue product, where MRP is downward sloping.
c. the wage rate is equal to marginal revenue product, where MRP is still sloping upward.
d. the difference between the wage rate and marginal revenue product is greatest.
b. the wage rate is equal to marginal revenue product, where MRP is downward sloping.
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The cross elasticity of demand for blank DVDs and DVD burners is likely to be
A) positive because they are substitutes. B) positive because they are complements. C) negative because they are substitutes. D) negative because they are complements. E) negative because with the advent of digital cameras, film and film cameras are inferior goods.
In the market for labor, the monopsonist is the sole:
A. seller and can push wages down, below the competitive wage. B. buyer and can keep wages up, above the competitive wage. C. buyer and can push wages down, below the competitive wage. D. seller and can keep wages up, above the competitive wage.
Why doesn't the Fed eliminate inflation from the economy entirely?
a. It is incapable of doing so. b. It believes that inflation is bad for the economy. c. It believes that the measured inflation rate understates the true rate of inflation. d. It recognizes that continuing inflation helps labor markets adjust more easily. e. If it did so, no one would get a raise in salary.
The structural deficit or surplus
A. shows the government where to make cuts in expenditures to follow the balanced budget requirement. B. reveals the complicated structure underlying government spending and tax policy. C. is the hypothetical deficit or surplus under current fiscal policies if the economy were operating near full employment. D. includes all government budgets-federal, state, and local.