You Have Been Hired by the No Hassle Collection Agency

question 189

Multiple Choice

You have been hired by the No Hassle Collection Agency to provide economic advice. The owner of the agency tells you that No Hassle's only variable input is the number of collection agents. The hourly wage for collection agents is $40.00. The marginal revenue product curve for collection agents reaches its maximum at five workers with a marginal revenue product of $34.00. What advice would you give this firm?

• A) Hire five collection agents 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 collection agents 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 collection agents and their marginal revenue product.

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Definitions:

Temper Tantrum

An emotional outburst, typically characterized by crying, screaming, or stubbornness, often occurring in young children as a response to frustration or lack of control.

Regressing

The act of returning to a previous state or condition, often in psychological contexts referring to a return to earlier stages of behavior or development.

Displacing

The process of transferring feelings or emotions from the original source to another target.

Health Psychology

The study of psychological and behavioral processes in health, illness, and healthcare, aiming to improve health through understanding and intervention.