To Maximize Profit,the Firm Must Equate the

question 114

Multiple Choice

To maximize profit,the firm must equate the

• A)wage rate to the price of the good.
• B)wage rate to the marginal product of labour.
• C)value of marginal product to the factor price.
• D)marginal factor cost to the price of the output.
• E)marginal cost of the factor to the marginal product of the factor.

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Definitions:

Factory Overhead

All indirect costs associated with manufacturing, excluding direct materials and direct labor costs, such as utilities and rent for the factory.

Indirect Labor

Labor costs of workers who assist in or facilitate the manufacturing process but do not directly work on the product.

Prime Costs

Direct materials and direct labor costs that are directly associated with the production of goods.

Factory Overhead Costs

Expenses related to operating a factory that cannot be directly traced to specific units produced, such as electricity, maintenance, and rent of the factory space.