You Have Been Hired by a Data Processing Firm to Provide

question 118

Multiple Choice

You have been hired by a data processing firm to provide economic advice. The owner of the firm tells you that the firm's only variable input is the number of data-entry operators. The hourly wage for data-entry operators is $15.00. The marginal revenue product curve for data-entry operators reaches its maximum at three workers with a marginal revenue product of $12.00. What advice would you give this firm?

• A) Hire three data-entry operators so as to minimize the amount of money the firm will lose.
• B) Shut down immediately, as the firm is not able to cover all of its variable costs.
• C) Increase the wage rate paid to data-entry operators so that their marginal revenue product will increase.
• D) Produce as much as possible so as to maximize the difference between the wage paid to data-entry operators and their marginal revenue product.

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Definitions:

Combine

To merge or unite two or more items or quantities to form a single entity.

Simplify

The process of altering an expression to make it easier to understand or solve by combining like terms or using properties of operations.

Complex Fraction

A fraction where the numerator, the denominator, or both contain a fraction.

Simplify

The process of making an equation, expression, or problem easier to handle by reducing its complexity while maintaining its equivalence.