If a Profit-Maximizing Firm Hires an Additional Unit of Labor

question 32

Multiple Choice

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

• A) Its wage always equals its marginal revenue product.
• B) Its wage is always greater than its marginal revenue product.
• C) Its wage is always total revenue minus marginal revenue product.
• D) Its wage is always less than or equal to its marginal revenue product.

---

Definitions:

Plant Insurance

Insurance coverage specifically designed to protect the physical assets of a manufacturing or production facility, including buildings and machinery.

Indirect Materials

Materials used in the production process, but cannot be directly linked to a specific product.

Indirect Labor

Costs for labor that are not directly associated with the production of goods or delivery of services, such as maintenance staff.

Line Department

A department that directly advances the core work or goals of an organization, as opposed to a support or administrative department.