A Profit-Maximizing Firm Will Hire the Variable Input, Labor, Until

question 38

Multiple Choice

A profit-maximizing firm will hire the variable input, labor, until the point where:

• A) marginal product of labor is equal to the marginal revenue product of capital.
• B) marginal revenue from each unit of output is equal to the wage rate.
• C) marginal revenue product of labor is equal to the marginal cost of labor.
• D) marginal revenue product of labor is equal to zero.
• E) marginal product of labor equals the marginal revenue from each unit of output.

---

Definitions:

Gross Profit Rate

A financial metric that represents the proportion of money left over from revenues after accounting for the cost of goods sold.

Retail Inventory Method

An accounting technique for estimating inventory value by using a proportion between the retail price and cost of goods.

Cost Ratio

A measure that compares a company's operating expenses to its revenue, indicating how efficiently it is managed by showing the percentage of sales that goes towards covering costs.

Beginning Inventory

The value of a company's stock of goods at the start of an accounting period, serving as a baseline for inventory management.