If the Value of the Marginal Product of Labor Exceeds

question 324

Multiple Choice

If the value of the marginal product of labor exceeds the wage, then hiring another worker increases the firm's

• A)profit.
• B)total cost.
• C)total revenue.
• D)All of the above are correct.

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Definitions:

Time Preference

The inclination of individuals to prefer goods and services sooner rather than later.

Rational Expectations

The hypothesis that individuals form predictions of the future based on available information and act on those predictions rationally.

Consumption Goods

Goods that are purchased by consumers for the purpose of consumption and not for resale.

Capital Goods

Physical assets such as buildings, machinery, and equipment used by businesses to produce goods and services.