You Have Been Hired by a Data Processing Firm to Provide

question 11

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 $10.00. 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 maximize profits.
• B) Shut down immediately, as the firm is not able to cover all of its variable costs.
• C) Decrease the wage rate paid to data-entry operators so that their marginal revenue product will decrease.
• D) Hire data-entry operators until the marginal revenue product is equal to the wage-which will occur when more than three operators are employed.

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