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If the Marginal Revenue Product for a Firm Exceeds the Market

question 293

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If the marginal revenue product for a firm exceeds the market wage rate, the firm should _____ in order to maximize profits.


Definitions:

Marginal Cost

The expenditure for assembling another unit of a product or service.

Short-Run Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable for a short period.

Constant Returns

A situation in economics where increasing the scale of production does not affect the long-run average cost of production, implying it remains constant.

Initial Plant Sizes

The original capacity or scale of a facility when it first begins operations.

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