If a Firm Hires Another Worker and Her Marginal Product

question 142

Multiple Choice

If a firm hires another worker and her marginal product of labor is 0 (zero) , we know that the firm's total output is:

• A) 0 (zero).
• B) unchanged.
• C) increasing.
• D) decreasing.
• E) equal to the marginal product of that worker.

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Definitions:

Liability

A company's financial debt or obligations that arise during business operations, to be settled over time through the transfer of economic benefits.

Owner Contribution

Capital injected by the owners into the business, increasing equity.

Creditor

An individual or institution that lends money or extends credit to another party, expecting to be repaid the principal amount along with interest or to receive goods and services.

Equity

The residual interest in the assets of an entity after deducting liabilities, often equated with ownership equity in a company.