Mr.Smith's firm competes in a perfectly competitive market.The firm is currently hiring 30 workers.The value of marginal product of the last worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profit,Mr.Smith
A) continues hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired.
B) increases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour.
C) decreases the price of the firm's product so that the value of marginal product of the last worker hired increases to $8.00 per hour.
D) decreases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00.
E) increases the number of workers until the value of marginal product of labour of the last worker hired equals $8.00.
Correct Answer:
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