A Worker's Hourly Wage Is $25 and Output Sells for $5

question 28

Multiple Choice

A worker's hourly wage is $25 and output sells for $5 a unit.What is the minimum marginal product a worker must produce in order for a competitive employer to break even when hiring the worker?

• A) 1/5
• B) 5
• C) 25
• D) 125

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Definitions:

Cannibalization

The reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

Pre-Tax Cash Flow

The amount of cash that a company generates before accounting for taxes, used in evaluating its financial performance.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.

Tax Rate

The percentage at which an individual or corporation is taxed, which can vary based on income level, type of income, and jurisdiction.