The Diagram Below Shows the MRP Curve for a Firm

question 77

Multiple Choice

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour. FIGURE 13-1
-Refer to Figure 13-1.Suppose this profit-maximizing firm is facing MRP₁ and a wage rate of $12 per hour.Now suppose there is,simultaneously,an increase in demand for copper plumbing pipe (such that MRP shifts to MRP₂) ,and an increase in the wage rate to $16 per hour.The firm should

• A)employ 20 more units of labour.
• B)employ 40 more units of labour.
• C)employ the same number of units of labour.
• D)employ 40 fewer units of labour
• E)employ 20 fewer units of labour.

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Definitions:

Standard Cost

A predetermined cost of manufacturing, storing, and marketing a product, used for budgeting and performance evaluation.

Variances

Differences between planned or expected financial performances to the actual financial performance.

Standard Costs

Predetermined costs for materials, labor, and overhead that are used as benchmarks to measure actual performance against expected results.

Cost Of Goods Sold Account

An account in the general ledger that tracks the direct costs attributable to the production of the goods sold by a company.