When a Competitive Firm Produces Output Up to the Point

question 332

Multiple Choice

When a competitive firm produces output up to the point at which the price is equal to marginal cost, it also hires labor up to the point at which the wage is equal to the

• A)marginal cost of labor.
• B)marginal profit of labor.
• C)marginal product of labor.
• D)value of the marginal product of labor.

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Definitions:

Budget Constraint

A representation of all the combinations of goods and services that a consumer may purchase given current prices within his or her given income.

Slope

A measure of the steepness or gradient of a line, representing the ratio of the vertical change to the horizontal change between two points on the line.

Price

The financial cost associated with acquiring a good, service, or asset.

Income

Funds obtained regularly from work performed or investments made.