If a Profit-Maximizing Firm Hires an Additional Unit of Labor

question 32

Multiple Choice

If a profit-maximizing firm hires an additional unit of labor, what must be true about labor's wage and marginal revenue product?

• A) Its wage always equals its marginal revenue product.
• B) Its wage is always greater than its marginal revenue product.
• C) Its wage is always total revenue minus marginal revenue product.
• D) Its wage is always less than or equal to its marginal revenue product.

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Definitions:

Certificates of Deposit

A savings certificate with a fixed maturity date and specified fixed interest rate that is issued by banks and is insured by the Federal Deposit Insurance Corporation (FDIC) up to a certain amount.