If Employers Are Perfectly Competitive Profit Maximizers Then They Hire

question 23

Multiple Choice

If employers are perfectly competitive profit maximizers then they hire labor until:

• A) The VMPL equals the average total cost
• B) The VMPL equals the average variable cost
• C) The VMPL equals the wage
• D) The VMPL is greater than the average fixed cost

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Definitions:

Selling Price

The amount of money charged to the customer for a product or service.

Variable Manufacturing Costs

These are costs that vary directly with the level of production output, including expenses like raw materials and variable labor costs.

Fixed Manufacturing Overhead

Costs that do not vary with the level of production output and include expenses such as rent, property taxes, and salaries for permanent staff.

Selling Price

The amount a buyer pays to acquire a product or service from a seller.