Suppose There Is a Perfectly Competitive Firm That Has Hired

question 9

Multiple Choice

Suppose there is a perfectly competitive firm that has hired 200 workers.Suppose wages equal $15 per hour and the marginal revenue product of labor is $20.What should the firm do in order to reach the profit-maximizing level of production?

• A) Hire more workers till MRP = MC.
• B) Keep the same number of workers.
• C) Fire workers until MRP = MC.
• D) Lay off the less efficient workers.
• E) C and D

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Definitions:

Forward Contract

A non-standardized agreement between two parties to buy or sell an asset at a specified future date for a price that is agreed upon today.

Balance Sheet

A report that outlines a firm's assets, liabilities, and shareholders' equity at a particular moment.

Foreign Currency

Currency used in a country other than the home country of the business entity, often involved in international transactions.

Foreign Exchange Gain

A profit resulting from changes in exchange rates when foreign currency holdings are valued at the current exchange rate.