Suppose That a Public Accounting Firm Plans to Hire Some

question 94

Multiple Choice

Suppose that a public accounting firm plans to hire some accountants for tax season. What will happen to the marginal product of labor as the firm hires more and more accountants?

• A) The marginal product of labor will increase because preparing tax returns requires high levels of education and experience.
• B) The marginal product of labor will increase because completing and filing tax returns requires team production techniques.
• C) The marginal product of labor will decline because each subsequent accountant that is hired will be assigned to work on less important (i.e., less lucrative) tax returns.
• D) The marginal product of labor will not change because the practice of accounting is quite standardized, forcing all accountants to follow the uniform procedures set forth in federal tax law.

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Definitions:

Perfect Competition

A market setup where numerous small companies, offering indistinguishable products and having the freedom to enter or exit the market, results in firms accepting the market price without influencing it.

Equal to Price

Equal to price refers to a situation where a particular value, cost, or measure is identical to the price level of a good or service, indicating a direct correlation between the two.

Total Revenue

The total amount of money received by a company from sales of its products or services before any expenses are subtracted.

Total Output

The total quantity of goods or services produced by a firm or economy.