If a Firm Is a Price Taker in Both the Labor

question 3

Multiple Choice

If a firm is a price taker in both the labor market and the output market,it will

• A) earn zero economic profit in the short run.
• B) hire labor until the marginal product of labor equals zero.
• C) hire labor until the marginal revenue product equals the output price.
• D) hire labor until the marginal revenue product equals the wage rate.

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Definitions:

Owner

An individual or entity that has the legal right, title, and interest in property or assets.

Business

An entity engaged in commercial, industrial, or professional activities with the aim to produce profit or fulfill a charitable mission.

Personal Income Taxes

Taxes levied on the income of individuals, typically based on their earnings from employment, investments, and other sources.

Proprietor

The owner of a business establishment, a shop, or any other commercial enterprise.