If a Firm Is Producing at the Level of Output

question 18

Multiple Choice

If a firm is producing at the level of output where the marginal product of labor is greater than the marginal cost of labor (the wage) ,then

• A) profits will increase if the firm hires more workers.
• B) profits will increase if the firm fires some workers.
• C) the firm always has negative economic rent.
• D) the accounting profits are always greater than the economic profits.
• E) the firm is maximizing profits.

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Definitions:

Commercial Banks

Financial institutions that offer a wide range of banking services to businesses and consumers, including deposit accounts and loans.

Short-Term Loans

Loans that are scheduled to be repaid in less than a year, used to meet immediate financial needs or cash flow shortages.

Abnormal Returns

Financial returns that exceed what is expected based on risk-adjusted benchmarks or historical averages.

Macroeconomic Analysis

The examination of the overall economic dynamics, including national income, growth rates, inflation, and unemployment.