Figure 18-5 The Figure Shows a Particular Profit-Maximizing, Competitive Firm's Value-Of-Marginal-Product (VMP)

question 439

Multiple Choice

Figure 18-5
The figure shows a particular profit-maximizing, competitive firm's value-of-marginal-product (VMP) curve. On the horizontal axis, L represents the number of workers. The time frame is daily.
-Refer to Figure 18-5. Suppose one point on the firm's production function is (L = 3, Q = 180) , where L = number of workers and Q = quantity of output. If the firm sells its output for $5 per unit, then

• A)a second point on the firm's production function is (L = 4, Q = 216).
• B)the firm's production function exhibits the property of diminishing marginal product of labor.
• C)the firm will maximize profit by hiring four workers if it pays workers $160 per day.
• D)All of the above are correct.

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Definitions:

Profit-maximizing

How a company decides on the price and production rate that leads to the greatest financial gain.

Output Units

The quantity of product or service produced by a company or a production process.

Patent

A barrier to entry that grants exclusive use of the patented product or process to the inventor.

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Aluminum containers used for packaging soft drinks and other beverages, chosen for their lightweight, durability, and recyclability.