In the short run, labor is the only variable factor used by a firm in the production of a certain product. The manager of the firm has estimated that the marginal product of labor is given by MPL = 160/√L. The wage per unit of labor is w = $24, and each unit of output can be sold at a constant price P. The firm is maximizing profits by employing L = 100. Based on this information
A. the price of each unit of output is P = $1.5.
B. the firm will increase L if w increases
C. the law of diminishing returns does not hold
D. none of the above.