When a Competitive Firm Maximizes Profit, It Will Hire Workers

question 7

Multiple Choice

When a competitive firm maximizes profit, it will hire workers up to the point where the

• A)marginal product of labor is equal to the product price.
• B)marginal product of labor is equal to the wage.
• C)value of the marginal product of labor is equal to the product price.
• D)value of the marginal product of labor is equal to the wage.

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Definitions:

Distribution of Income

Refers to the way in which total income is shared among the holders of different types of assets within an economy.

Negative Income Tax

A tax system that collects revenue from high-income households and gives subsidies to low-income households.

Family Income

The total amount of money earned by members of a family, typically measured annually.

Negative Income Tax

A welfare system that provides income support by offering a direct transfer of funds to individuals whose income falls below a certain threshold.