Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit. Assume that labor is the only input. If the last worker hired produces four units of output per hour, then to maximize profits the firm should
A) hire another worker.
B) not change the number of workers it currently hires.
C) lay off some workers.
D) There is not enough information to answer the question.
B
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A bank has deposits of $400, reserves of $50, and the desired reserve ratio is 7 percent. The bank's excess reserves are
A) $28. B) $50. C) $22. D) $0. E) $3.50
Which of the following is likely to cause a right shift in the supply curve for labor?
A) An increase in the population B) A decrease in the population C) An increase in the price of the final good that the workers produce D) A decrease in the price of the final good that the labor is used to produce
If the marginal utility of apples exceeds the marginal cost of producing apples, then in a free market production of apples will ____, with the likely result that marginal utility will ____
a. rise; fall b. fall; rise c. rise; rise d. fall; fall
Fractional reserve banking takes its name from the fact that banks
a. hold only a fraction of their reserves at the bank itself. b. keep only a fraction of their total deposits on reserve. c. lend only a fraction of their total reserves to customers. d. reserve only a fraction of their activity for lending.