A Firm Operating in a Purely Competitive Labor Market Has

question 253

Multiple Choice

A firm operating in a purely competitive labor market has the marginal revenue product schedule shown in the table. $\begin{array}{l}\begin{array} { | c | c | } \hline\text { Warkers}& \text {MRP }\\\hline 1 & \$ 24 \\\hline 2 & 22 \\\hline 3 & 20 \\\hline 4 & 18 \\\hline 5 & 16 \\\hline 6 & 14 \\\hline 7 & 12 \\\hline\end{array}\end{array}$ If the wage rate decreases from $17 to $13, by how much will the firm expand employment?

• A) 5 workers
• B) 4 workers
• C) 3 workers
• D) 2 workers

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Definitions:

Dissolution

The process of legally dissolving a business entity, which includes disbanding its operations and distributing its assets.

Partnership

An officially recognized form of commercial enterprise undertaken by at least two individuals, involving joint management and profit allocation.

Capital Account

A national account that shows the net change in asset ownership for a nation, including investments and loans, but not related to current transactions.

Practical Consequences

Real-life effects or outcomes that follow from a specific action or decision, often considered in decision-making processes.