If a Firm Finds Itself at the Point Where the Value

question 128

Multiple Choice

If a firm finds itself at the point where the value of marginal product of labor is greater than its wage rate,then the firm

• A) stops hiring more workers but does not fire any because the firm is maximizing its profit.
• B) decreases the number of workers it has hired in order to increase its profit.
• C) increases the number of workers it hires in order to increase its profit.
• D) increases sales to keep its employees busy.
• E) changes its employment of workers and maximizes its profit by hiring the number of workers that makes the difference between the value of the marginal product and the wage rate as large as possible.

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Definitions:

Pension Benefit Guarantee Corporation

A federal agency that protects the retirement incomes of American workers in private-sector defined benefit pension plans.

T-statistic

A value derived from the t-test, used to determine if there is a significant difference between the means of two groups being compared.

Z-score

A statistical measurement of a score's relationship to the mean in a group of scores.

Sampling Distribution

A distribution of probabilities associated with a particular statistic, originating from a random sample.