As Applied to Labor Demand,the Marginal Approach to Profit

question 68

Multiple Choice

As applied to labor demand,the marginal approach to profit

• A)is irrelevant
• B)requires setting marginal cost equal to the wage rate
• C)requires setting marginal revenue equal to the wage rate
• D)says that a firm should increase employment if doing so adds more to revenue than it adds to cost
• E)says that a firm should decrease employment if doing so adds more to cost than it adds to revenue

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Definitions:

Equilibrium GDP

The level of Gross Domestic Product at which the total quantity of final goods and services produced equals the total quantity demanded.

Savings

The portion of income that is not spent on current expenditures and is set aside for future use, often in a bank or investment.

Aggregate Demand

The comprehensive call for goods and services within an economic setting, set at a particular total price level for a given temporal duration.

Aggregate Supply

Refers to the total quantity of goods and services that producers in an economy are willing and able to supply at a given overall price level in a given period.