A Consultant Interviews the Hiring Manager of a Small, Profit-Maximizing

question 81

Multiple Choice

A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees, but the most-recently-hired employee has just left the company. The firm is currently advertising to hire a worker to replace the employee who just left at the same wage rate. We can infer that

• A)for the 15th employee, the wage exceeded the value of the marginal product of labor.
• B)for the 15th employee, the value of the marginal product of labor exceeded the wage.
• C)the firm is too large and should remain at 14 employees.
• D)the firm is no longer attempting to maximize profits.

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Definitions:

Consideration

In contract law, the mutual promise to exchange benefits and detriments between parties.

Premiums

The amount paid for insurance coverage or the payment above the nominal value of a security when issued.

Inland Marine Insurance

An insurance contract that covers goods that are moved by land carriers such as rail, truck, and airplane.

Land Carriers

Companies or entities that transport goods or people over land, such as by road or rail.