The Diagram Below Shows the MRP Curve for a Firm

question 26

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 firm is facing MRP₁,a wage rate of $12 per hour and is employing 150 units of labour.At this level of employment,

• A)the last unit of labour is adding less to the firm's cost than it is adding to the firm's revenue,so it should increase the use of labour.
• B)the last unit of labour contributes as much to the firm's costs as to the firm's revenues and so the firm should not change its use of labour.
• C)the last unit of labour is adding more to the firm's cost than it is adding to the firm's revenue,so it should reduce the use of labour.
• D)the firm has shifted the MRP curve to MRP₂.
• E)the firm has shifted the MRP curve to MRP₃.

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