A Company Finds That the Value of Marginal Product for the Current

question 72

Multiple Choice

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $45.Which of the following is correct?

• A) The firm is employing the profit-maximizing quantity of labor.
• B) Too much labor is currently employed and the firm will lay off some workers.
• C) Too few workers are currently employed and the firm will hire more workers.
• D) The firm should shut down and produce nothing.
• E) More information about the price of the product is needed to determine if the firm is hiring the profit-maximizing amount of labor.

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Definitions:

Total Reserves

The sum of all deposits, including cash, bank deposits, and investable assets, held by a financial institution or country.

Required Reserves

The minimum amount of reserves a bank must hold, as mandated by regulatory bodies, based on a percentage of the bank's deposit liabilities.

Money Supply

The total quantity of money available in the economy at a given time, including currency, deposits, and other liquid assets.

Required Reserve Ratio

The proportion of deposits that banks are required to hold in reserve and not lend out.