When a Firm Hires Labor Up to the Point Where

question 317

Multiple Choice

When a firm hires labor up to the point where the wage is equal to the value of the marginal product of labor, it is

• A)minimizing labor costs.
• B)guaranteeing that labor costs do not exceed fixed costs.
• C)maximizing the number of workers it can hire and still experience a positive profit.
• D)maximizing profit.

---

Definitions:

Standby Fee

A charge paid to a lender or service provider for keeping credit or facilities available to a borrower, even if not currently used.

Overallotment Option

A provision that allows underwriters to sell investors more shares than initially planned by the issuer, typically in an Initial Public Offering (IPO).

IPO Underpricing

The phenomenon where the initial offering price of a stock is set lower than the market price on its first trading day.

Underpricing

A situation in which a new issue of securities is priced below its market value, leading to immediate gains for investors when the stock is traded publicly for the first time.