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 2If 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
QUESTION 3Suppose a firm is a price searcher in the product 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 each. 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. maximizing profit when it produces 100 units of the product
e. not maximizing profit when it produces 100 units of the product and should increase production to increase profit
QUESTION 4When the benefits to society of using a product exceed benefits to the user,
a. the product should be strictly regulated
b. the product should be taxed
c. the product provides a positive externality
d. the product is overproduced at the privately determined equilibrium
e. in time the product will not be produced
QUESTION 5Which of the following represents the resource supply curve faced by a firm that hires resources in a perfectly competitive resource market?
a. its ATC curve
b. its AVC curve
c. its MRP curve
d. its MRC curve
e. its AFC curve
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