If the Value of Marginal Product of a Factor of Production

question 41

Multiple Choice

If the value of marginal product of a factor of production exceeds the price of the factor, the

• A) firm should hire more of that factor.
• B) firm should hire less of that factor.
• C) firm is maximizing profits.
• D) firm should shut down.

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Definitions:

Long Run

A period of time sufficient for all variables within an economic model or business scenario to be adjusted, not confined by fixed constraints.

Effective

Being successful in producing a desired or intended result.

Positive Reinforcer

A stimulus which, when presented after a specific behavior, increases the likelihood of that behavior occurring in the future, often seen as beneficial or rewarding.

Desired Behavior

Specific actions or reactions that an individual or organization wishes to encourage or establish as a norm.