For a Firm That Is Competitive in Both Product and Factor

question 93

Multiple Choice

For a firm that is competitive in both product and factor markets,the value of the marginal product of labor:

• A) is constant and equal to the market wage.
• B) increases, causing the labor supply curve to slope upward.
• C) declines because the marginal product of labor diminishes as the number of workers rises.
• D) declines because a competitive firm must lower product price in order to increase sales.

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Definitions:

Variable Factor

An input in the production process that can be adjusted in the short term to change the output level, such as labor or raw materials.

Fixed Factors

Elements of production that cannot be easily increased or decreased in the short term, such as land, buildings, or capital equipment.

Weak Axiom

A principle or condition in economics that provides a minimal criterion for consumer choice consistency under certain assumptions.

Profit Maximization

A process or strategy in which a firm's primary objective is to achieve the highest possible profits by adjusting its production and pricing techniques.