Refer to the Following

question 4

Multiple Choice

Refer to the following:
A manger of a firm with market power faces the marginal revenue product and average revenue product curves shown below. The firm incurs weekly fixed costs of $1,800. The firm employs a single variable input, labor, which costs $600 per worker each week.

-Suppose the weekly wage rate increases to $1,400 per worker. The firm would hire _______ workers and earn a profit of _______ per week.

• A) 6 ; $8,400
• B) 6 ; $6,000
• C) 6 ; -$2,400
• D) 6 ; $4,800
• E) 0 ; -$1,800

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Definitions:

Future Cash Flows

Projected cash payments or receipts over a future period, crucial for evaluating investments and financial planning.

Rate of Return

The upward or downward movement in the value of an investment through a given timeframe, expressed as a percentage of the investment's initial cost.

Invests

Assigning financial resources with the goal of achieving returns or profit.

Granddaughter

A female grandchild, being the daughter of one's son or daughter.