A Firm Finds That It Must Increase Wages to Attract

question 6

Multiple Choice

A firm finds that it must increase wages to attract extra workers. The firm will hire labor up to the point where the marginal

• A) product of labor equals the wage rate.
• B) revenue product of labor is greater than the wage rate.
• C) revenue product of labor starts to decline.
• D) revenue product equals the additional cost of hiring an extra worker.

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Definitions:

Transaction Costs

Expenses incurred in making an economic exchange, including search, bargaining, and enforcement of contracts.

Volume Of Trade

The total quantity of shares or contracts traded for a specified financial instrument or market within a specified period.

Gains From Trade

The increase in utility or welfare that countries or individuals obtain by engaging in voluntary exchange of goods and services.

Price Differential

The difference in price between two related goods, markets, or levels of supply chain.