Assume That the Going Wage for a Worker at a Competitive

question 262

Multiple Choice

Assume that the going wage for a worker at a competitive firm is $50 a day. If the marginal revenue product for the sixth worker is $45 a day, the

• A) sixth worker should be hired.
• B) firm is maximizing its profits.
• C) firm should hire fewer than six workers.
• D) competitive firm can change the wage rate.

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Definitions:

Year-end Adjustment

Adjustments made to financial statements at the close of a fiscal year to account for all financial activities and ensure accuracy in reporting.

Market Value

The current price at which an asset or service can be bought or sold, determined by the supply and demand dynamics in the open market.

Common Stock

Shares of ownership in a corporation that entitle the shareholder to vote on corporate matters and receive dividends, subject to the company's profitability.

Short-term Speculation

The practice of buying and selling assets with the intention of making quick profits from short-term fluctuations in price.