A Company Finds That the Value of Marginal Product for the Current

question 119

Multiple Choice

A company finds that the value of marginal product for the current level of employment is $53 and the wage rate is $75.Which of the following is correct?

• A) The firm is employing the profit-maximizing quantity of labor.
• B) Too much labor is currently employed and the firm will lay off some workers.
• C) Too few workers are currently employed and the firm will hire more workers.
• D) The firm should shut down and produce nothing.
• E) More information about the price of the product is needed to determine if the firm is hiring the profit-maximizing amount of labor.

---

Definitions:

Dividends in Arrears

Unpaid dividends on cumulative preferred stock, which must be paid out before any dividends can be issued to common stockholders.

Cumulative Preferred Stock

A type of preferred stock where missed dividend payments are accumulated and must be paid before any dividends can be issued on other stock classes.

Liability

A financial obligation or debt owed by a company to another entity, to be settled through the transfer of assets or services.

Date of Declaration

The date on which a company announces its intention to pay a dividend or issue a corporate action to its shareholders.