The Table Below Shows a Competitive Firm's Short-Run Production Function $\begin{array}{cccc} \text {Units of Labor } & \text { Units of Output} \\3 &370\\4 &490\\5 &570\\6 &600\\7&620\\\end{array}$

question 87

Multiple Choice

The table below shows a competitive firm's short-run production function.Labor is the firm's only variable input,and market price for the firm's product is $2 per unit. $\begin{array}{cccc} \text {Units of Labor } & \text { Units of Output} \\3 &370\\4 &490\\5 &570\\6 &600\\7&620\\\end{array}$

If the wage rate is $200,the firm should

• A)shut down because average revenue product is $200,which is less than marginal revenue product.
• B)shut down because average revenue product is $228,which is greater than the wage rate.
• C)produce because average revenue product is $200,which is less than marginal revenue product.
• D)produce because average revenue product is $245,which is greater than the wage rate.

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Definitions:

Shift

A change in position, direction, or tendency, often referring to movements in supply or demand curves in economics.

Tax

A compulsory financial charge or levy imposed by a government on individuals or entities to fund public expenditures.

Excise Tax

A tax imposed on specific goods, services, or activities, often with the aim of reducing consumption of those items or generating revenue.

Tax Revenue

The income that is gained by governments through taxation, used to fund public services and government operations.