A Firm That Wants to Maximize Profits Should Hire Each

question 291

Multiple Choice

A firm that wants to maximize profits should hire each input to the point where

• A) its marginal revenue product divided by the price of the input equals one.
• B) its marginal revenue product divided by its marginal physical product equals the wage.
• C) its marginal revenue product divided by the product price equals one.
• D) its marginal physical product divided by the price of the input equals the product price.

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Definitions:

Cognitive Dissonance

A psychological discomfort experienced when holding contradictory beliefs or ideas, prompting an individual to seek consistency.

Attitudes

The settled ways of thinking or feeling about someone or something, typically reflected in a person's behavior.

Behavior

The actions or reactions of an individual or group in response to external or internal stimuli.

Intentions

The plans or goals that individuals form to guide their actions, often predicting behavior in various contexts.