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:

Mandatory Indirect Pay

Required compensation benefits provided by employers, such as social security contributions and unemployment insurance, that are not part of direct wages.

Medical Coverage

An insurance benefit that covers the cost of an individual's healthcare needs, usually provided by employers or purchased individually.

Workers' Compensation

Insurance that provides financial benefits and medical care to employees who are injured or become ill as a direct result of their job.

Profit Sharing

An employee benefit scheme where a portion of a company's profits is distributed to the employees, strengthening their investment in the company's success.