Firms Should Hire Additional Units of a Resource as Long

question 152

Multiple Choice

Firms should hire additional units of a resource as long as the

• A) marginal product of the resource exceeds the price of the resource multiplied by the quantity of output produced.
• B) marginal product of the resource is less than the price of the resource.
• C) price of the output produced is positive.
• D) marginal revenue product of the resource exceeds the cost of employing an additional unit of the resource.

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Definitions:

Common Fixed Expenses

Expenses that do not vary with the level of production or sales, and are shared by more than one segment or department within an organization.

Net Operating Income

Income from operations before interest and taxes, reflecting the profitability of a company's core business activities.

Contribution Margin

The amount remaining from sales revenue after variable expenses have been deducted.

Segment Margin

The amount of profit or loss generated by a specific segment of a business, after deducting direct and allocated expenses attributable to that segment.