A Perfectly Competitive Firm Should Hire an Additional Worker Only

question 58

Multiple Choice

A perfectly competitive firm should hire an additional worker only if:

• A)total revenue is less than total cost.
• B)the worker's marginal revenue product is less than the wage rate.
• C)the worker's marginal product falls.
• D)the worker's marginal product rises.
• E)the worker's marginal revenue product exceeds the wage rate.

---

Definitions:

Perfect Information

A condition in decision-making and game theory where all parties have complete and accurate information about the situation.

Net Present Value

A financial metric that calculates the present value of all future cash flows of a project or investment, considering the time value of money.

Maximax Strategy

A decision-making approach focused on maximizing the maximum possible payoff, suitable for optimistic decision-makers.

Maximin Criterion

A decision rule used in statistics, economics, and game theory that selects the action which has the highest minimum payoff.