The Value of Marginal Product for the Last Worker Hired

question 15

Multiple Choice

The value of marginal product for the last worker hired is $20 and the wage rate is $25.The firm

• A)should reduce its labor usage.
• B)should increase its labor usage.
• C)should keep the last worker it hired.
• D)is cost minimizing.

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Definitions:

MIRR

Modified Internal Rate of Return, which adjusts for the differences in reinvestment rates of a project's cash flows.

Project

A temporary endeavor undertaken to create a unique product, service, or result with defined objectives and constraints.

WACC

Weighted Average Cost of Capital; a measure used to calculate the average cost of a company's financing sources, including equity and debt.

NPV

Net Present Value; a calculation that compares the present value of cash inflows with the present value of cash outflows over a period of time to assess profitability.