A Competitive Firm Sells Its Output for $45 Per Unit

question 203

Multiple Choice

A competitive firm sells its output for $45 per unit.The marginal product of the 30th worker is 4 units of output per day;the marginal product of the 31st worker is 3 units of output per day.The firm pays its workers a wage of $150 per day.

• A)For the 31st worker, the marginal profit is $135.
• B)For the 30th worker, the value of the marginal product of labor is $600.
• C)For the 30th worker, the marginal profit is $180.
• D)None of the above is correct.

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Definitions:

Strategically

Refers to actions taken by a business or individual that are planned to achieve a specific long-term goal or advantage.

Spinoff

A method of divesting a business unit by setting it up as a separate company and giving its shares to stockholders in proportion to their holdings of the original firm. After the spinoff stockholders can trade the two stocks separately.

Bankruptcy Proceedings

Legal process initiated by an insolvent individual or company to receive relief from debt by reorganizing or liquidating assets.

Creditors

Entities or individuals that a company owes money to due to the provision of goods, services, or loans.