If the Wage Exceeds the Value of the Marginal Product

question 346

Multiple Choice

If the wage exceeds the value of the marginal product of labor, then hiring another worker

• A)decreases the firm's total revenue.
• B)increases the firm's profit.
• C)decreases the firm's total cost.
• D)decreases the firm's profit.

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Definitions:

Markup

The amount added to the cost of a product or service to arrive at a selling price.

Variable Cost Concept

An accounting principle that refers to costs that change in proportion to the level of activity or volume of production.

Rate of Return

The gain or loss of an investment over a specific period, expressed as a percentage of the investment's initial cost.

Production Bottleneck

A point in the manufacturing process where the flow of production is impeded, often leading to delays and reduced efficiency.