A Company Finds That the Value of Marginal Product for the Current

question 86

Multiple Choice

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $53.Which of the following is correct?

• A) The firm is employing the profit-maximizing quantity of labor.
• B) Too much labor is currently employed and the firm will lay off some workers.
• C) Too few workers are currently employed and the firm will hire more workers.
• D) The firm should shut down and produce nothing.
• E) More information about the price of the product is needed to determine if the firm is hiring the profit-maximizing amount of labor.

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Definitions:

Inventory Decrease

A reduction in the quantity or value of inventory held by a business over a specific period.

Cash Payments

Transactions involving the transfer of cash from one entity to another, usually as exchanges for goods, services, or to settle debts.

Purchases

Transactions involving the buying of goods or services for the purpose of resale or direct use in production or operations.

Free Cash Flow

The amount of cash generated by a business after accounting for capital expenditures such as buildings or equipment, indicating the company's ability to generate additional revenues.