1. Assume a firm employs 10 workers and pays each $20 per hour. Also assume that the marginal product of an 11th worker would be 5 additional units of output per hour and that the price the firm receives for its good is $4 per unit. In the short run,
a. the firm should hire at least one additional worker.
b. the firm should reduce the number of workers employed.
c. the firm should continue to employ exactly 10 workers.
d. more information is required to answer this question
2. The typical marginal cost curve for a firm is upward sloping in the short run. This is because,
a. labor becomes more costly as output increases
b. fixed cost is divided by larger output levels thus average fixed cost falls as output increases
c. there is increasing marginal product in production when capital is fixed.
d. none of the above is correct.
3. The typical marginal cost curve for a firm is upward sloping in the short run. This is because
a. labor becomes more costly as output increases
b. fixed cost is divided by larger output levels thus average fixed cost falls as output increases
c. there is increasing marginal product in production when capital is fixed.
d. none of the above is correct.
4. Which of the following is true for a firm with market power and is maximizing its profit?
a. P = MC
b. P = MR
c. P > MR
d. P < MR