When a Firm Is Competitive in Both Product and Factor

question 163

Multiple Choice

When a firm is competitive in both product and factor markets, which of the following statements best describes the value of the marginal product of labour?

• A) It increases, causing the labour supply curve to slope upward.
• B) It declines because the marginal product of labour diminishes as the number of workers rises.
• C) It declines because a competitive firm must lower product price in order to increase sales.
• D) It is constant and equal to the market wage.

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Definitions:

Racketeering Activity

Illegal activities carried out as part of an organized crime operation, often involving extortion or fraud.

Legitimate Enterprise

A business or organization that is conducted lawfully and with genuine intentions.

Otherwise Legal

Pertaining to actions or conditions that are permitted or recognized by law, except for specific exclusions or conditions.

Phishing

Online fraud in which criminals pretend to be legitimate companies by using e-mails or malicious websites that trick individuals and companies into providing useful information, such as bank account numbers, Social Security numbers, and credit-card numbers.