For a Profit-Maximizing Firm That Is a Price Taker in the Output

question 87

Multiple Choice

For a profit-maximizing firm that is a price taker in the output market and a wage taker in the labor market,which of the following will be true?

• A)The marginal revenue product will be higher than the marginal value product.
• B)The marginal cost of labor must be lesser than the price of output.
• C)The marginal value product of labor will equal the wage rate.
• D)The marginal revenue from an extra unit sold will be higher than price.

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Definitions:

Aggregate Planning

The process of creating a production plan to meet demand over a medium-term horizon while minimizing costs.

Production Level

The quantity of goods or services produced within a specified period by a company, factory, or manufacturing plant.

Forecast Errors

Discrepancies between predicted values and actual outcomes in forecasting, which can arise due to unexpected market changes or inaccurate data.

Aggregate Planning

A marketing activity that ensures supply meets demand by adjusting production rates, workforce levels, and inventory stock.