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

question 8

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:

Equilibrium Price Level

This is the price point at which the demand for goods matches the supply, stabilizing the economic market without excess surplus or shortage.

Aggregate Demand Curve

Illustrates the total demand for all goods and services in an economy at various price levels, holding all else equal.

Aggregate Supply Curve

A graphical representation showing the relationship between the overall price level in an economy and the quantity of goods and services produced.

Resource Prices

The cost of inputs used in the production of goods and services, such as raw materials, labor, and capital.