Ajax Has Just Discovered That the Marginal Revenue Product Generated

question 20

Multiple Choice

Ajax has just discovered that the marginal revenue product generated by the last worker hired was $50 while the marginal factor cost was $50. What should Ajax do?

• A) Leave the level of production unchanged.
• B) Increase the amount produced.
• C) Reduce the amount produced.
• D) Collect more information before making a decision.

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Definitions:

Inventory Cost

The total expense associated with holding and managing stock, including warehousing and spoilage costs.

Seasonal Demand

Fluctuations in the demand for certain products or services at particular times of the year.

Extending Credit

The practice of allowing a buyer to purchase goods or services now and pay for them at a later date, often involving the assessment of the buyer's creditworthiness.

Facilitating Function

Activities that assist in the movement of goods from the producer to the consumer, including transportation, storage, and financial services.