Use the Accompanying Graph, Which Depicts Mighty Max's Labor Demand

question 114

Multiple Choice

Use the accompanying graph, which depicts Mighty Max's labor demand for his duffle-bag business, to answer the questions that follow.

-If the wage of the fifth worker is $20 and her value of the marginal product of labor is $5,the firm:

• A) benefits by stopping at this level of labor.
• B) is likely to fire the fifth worker.
• C) asks this fifth worker to work overtime.
• D) benefits by hiring more workers.
• E) is likely to lose profit by hiring more workers.

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