Carolyn's Pottery Shop Produces Vases That Sell for $15 Each

question 312

Multiple Choice

Carolyn's Pottery Shop produces vases that sell for $15 each. Assume that labor is the only input that varies for the firm. If Carolyn hires 10 workers, she can produce and sell 500 vases per week. If she hires 11 workers, she can produce and sell 560 vases per week. Carolyn pays each of her workers $400 per week. Which of the following is correct?

• A)For the 11th worker, the marginal profit is $500.
• B)For the 11th worker, the marginal revenue product is $500.
• C)The firm is maximizing its profit.
• D)If the firm is employing 11 workers, then its profit would increase if it cut back to 10 workers.

---

Definitions:

Shares

Instruments of corporate or financial asset ownership, shares entitle owners to a proportional division of profits, paid as dividends, upon declaration.

Dividend

A portion of a company's earnings distributed to shareholders, often in the form of cash or additional shares.

Variance

A statistical measure that represents the average squared deviation from the mean, used to indicate the spread of a set of data points.

Returns

The profit or loss generated on an investment over a particular period, typically expressed as a percentage of the investment's initial cost.