If a Firm's Marginal Physical Product Is 5, and It

question 229

Multiple Choice

If a firm's marginal physical product is 5, and it sells its product for $60, and a unit of labor costs $200, the firm should

• A)increase the use of labor.
• B)decrease the use of labor.
• C)decrease the price of the product.
• D)reduce output of the product.

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Definitions:

Terminal Values

The estimated value of an asset at the end of its useful life or an investment at the end of a forecast period.

Opportunity Costs

The cost of foregoing the next best alternative when making a decision, representing the benefits an individual, investor, or business misses out on when choosing one alternative over another.

Depreciation

The allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Financing Costs

Expenses associated with raising capital for a company's operations or financing investments, such as interest and fees.