Initially, When a Firm Hires a Fourth Worker, Its Wage

question 7

Multiple Choice

Initially, when a firm hires a fourth worker, its wage rate goes from $80 a worker to $90. The marginal revenue product of the fourth worker is $100. Then the government imposes a minimum wage of $90 a worker. If the firm now hires the fourth worker, its profits will

• A) will increase by $10.
• B) will increase by $20.
• C) will decrease by $10.
• D) will decrease by $20.

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Definitions:

Manager's Power

The authority and influence held by managers to make decisions and direct the actions of employees.

Conglomerate

A coarse-grained sedimentary rock composed of rounded fragments or clasts of pre-existing rocks.

Basalt

A dark, fine-grained volcanic rock that is formed from the rapid cooling of basaltic lava at the Earth's surface.

Clasts

Fragments of geological detritus, such as minerals and rocks, formed by weathering and erosion.