Asked by Miftahul Khaira on May 23, 2024
Verified
Refer to Figure 18-3. The firm would choose to hire three workers if
A) the market wage for a day's work is $220.
B) the market wage for a day's work is $260.
C) the output price is $220.
D) the output price is $260.
Market Wage
The prevailing wage rate in a labor market for a given skill set, determined by supply and demand forces.
Output Price
The market price at which a final good or service is sold, affecting a firm’s revenue and production decisions.
- Assess the influence of shifts in market factors, including wage levels and product pricing, on the optimal employment level for firm profit maximization.
- Acquire knowledge on how the price of output is connected to the marginal product of labor's value.
Verified Answer
KH
Kylie HobgoodMay 25, 2024
Final Answer :
A
Explanation :
At a wage of $220, the firm's marginal revenue product (MRP) of the third worker is exactly $220, making it the last worker the firm would hire to maximize profit, as hiring any more workers would result in a MRP lower than the wage.
Learning Objectives
- Assess the influence of shifts in market factors, including wage levels and product pricing, on the optimal employment level for firm profit maximization.
- Acquire knowledge on how the price of output is connected to the marginal product of labor's value.