Author Question: A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor ... (Read 166 times)

sam.t96 · **on:** Jun 30, 2018

A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is 40 . The firm produces 100 units of the product, which sell for a price of 10 . This firm is
a. maximizing profit when it hires four workers
b. not maximizing profit and should hire more workers to increase profit
c. not maximizing profit and should hire fewer workers to increase profit
d. not maximizing profit when it produces 100 units of the product and should increase production to increase profit
e. not maximizing profit when it produces 100 units of the product and should decrease production to increase profit

Question 2

If the benefits to society of students attending college exceed benefits to the students,
a. higher education should be strictly regulated
b. higher education should be taxed
c. higher education provides a positive externality
d. higher education is overproduced at the privately determined equilibrium
e. in time, no higher education will be produced