Figure 18-5 The Figure Shows a Particular Profit-Maximizing, Competitive Firm's Value-Of-Marginal-Product (VMP)

question 194

Multiple Choice

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily.
-Refer to Figure 18-5. Assume that two points on the firm's production function are (L = 2, Q = 180) and (L = 3, Q = 228) , where L = number of workers and Q = quantity of output. The firm pays its workers $120 per day. The firm's non-labor costs are fixed, and they amount to $250 per day. We can conclude that

• A)the firm sells its output for $12 per unit.
• B)if the firm is currently employing 2 workers per day, then profit could be increased by $48 per day if a third worker is hired.
• C)the marginal cost per unit of output is $2.50 when output is increased from 180 units per day to 228 units per day.
• D)the firm's maximum profit occurs when it hires 3 workers per day.

---

Definitions:

Organic Product(s)

Chemical compounds and substances that are synthesized from organic molecules through various chemical reactions.

Reaction

A chemical process where substances interact to form new compounds or change into different substances, driven by the rearrangement of atomic bonds.

Organic Product

A compound containing carbon atoms bonded to other elements such as hydrogen, often produced through organic reactions.

Structure

The arrangement of atoms or molecules in a substance that defines its chemical and physical properties.