Use the Following to Answer Questions :
Scenario: the Decision

question 166

Multiple Choice

Use the following to answer questions :
Scenario: The Decision to Hire Labour
Assume that both the product market and the labour market are perfectly competitive.The price of this firm's product is $5.The firm's total product with respect to labour is given in the table that follows. $\begin{array}{llcc} \hline \text { Quantity } & \\ \text { of Labour } & \text { Quantity } \\ \text { (workers) } & \text {of Output }\\\hline 0&0\\1 &7\\2 &13\\3&18\\4&21\\\hline\end{array}$

-(Scenario: The Decision to Hire Labour) Use Scenario: The Decision to Hire Labour.How many workers will this perfectly competitive,profit-maximizing firm choose to hire if the equilibrium wage is $30?

• A) 1
• B) 2
• C) 3
• D) 4

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Definitions:

Economic Profit

A measure of profitability calculated by subtracting both explicit and implicit costs from total revenues, reflecting the true economic performance of a business.

Implicit Costs

Represent the opportunity costs of using resources that a firm already owns for production, instead of allocating them for other purposes.

Economic Profits

The margin between total earnings and all incurred costs, accounting for both obvious and concealed expenses.

Accounting Profits

Net income reported on a company's financial statements, calculated as total revenues minus explicit costs, excluding opportunity costs.