A Profit-Maximizing Firm Operates in Purely Competitive Product and Resource

question 144

Multiple Choice

A profit-maximizing firm operates in purely competitive product and resource markets, with the resource and production schedules shown in the table. $\begin{array} { | c | c |} \hline\text { Workers } & \begin{array} { c } \text { Total } \\\text { Production }\end{array} \\\hline 8 & 440 \\\hline 7 & 410 \\\hline 6 & 370 \\\hline 5 & 320 \\\hline 4 & 260 \\\hline 3 & 180 \\\hline 2 & 110 \\\hline 1 & 55 \\\hline\end{array}$ The product price is $10 per unit and the cost per worker is $540. How many workers will the firm employ?

• A) 4
• B) 5
• C) 6
• D) 7

Interpret financial data to assess the company's operational efficiency and market position, employing concepts like sales mix and selling price per composite unit.

Understand the concepts of unit contribution margin and contribution margin ratio and their significance to a company's cost structure.

Describe the components and purpose of a Cost-Volume-Profit (CVP) chart.

Define the break-even point and its importance in business decision-making.

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Definitions:

Omnidirectional

Characteristic of an antenna that can send or receive signals equally well in all directions.

Unidirectional

Moving or operating in a single direction, often used to describe devices that allow current to flow only one way, like diodes.

Bidirectional

Capable of moving or functioning in two opposite directions.

Basic Law

A fundamental principle or rule that forms the foundation of a system of beliefs, behavior, or reasoning, often referring to the essential laws of a scientific discipline.