When a firm is hiring an input such that the marginal revenue product of the input is equal to the marginal factor cost of the input, the firm
A) should be expanding output.
B) is hiring too little of the input.
C) is maximizing economic profit.
D) is producing too much output.
Answer: C
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The owner of a pizza shop observes that when she raises the price of a large pizza, her total revenue decreases, and when she lowers the price of a large pizza, her total revenue increases. This suggests that:
A. pizza lovers act irrationally. B. the demand for her large pizzas is inelastic with respect to price. C. the demand for her large pizzas is elastic with respect to price. D. there are few good substitutes for a large pizza.
In the circular flow model, consumption goods are bought and sold in the
A) goods markets. B) financial market. C) factor markets. D) government market. E) monetary flows.
Economies of scale exist whenever long-run average costs:
a. Increase as output is increased b. Remain constant as output is increased c. Decrease as output is increased d. Decline and then rise as output is increased e. None of the above
The supply curve for land in the city of San Francisco is most likely
A) horizontal or perfectly elastic. B) a downward sloping straight line. C) an upward sloping straight line. D) vertical or perfectly inelastic.