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Floor Lamp Inc

Question 39

Multiple Choice

Floor Lamp Inc.is a perfectly competitive firm that currently employs 100 workers.The marginal revenue product of the 90th worker is $7.00 per hour.The wage rate is $8.00 per hour.To increase profits,this firm should


A) increase employment until the MRP of labor equals $8.00.
B) continue hiring 100 workers because the firm earns a surplus of $1.00 on each worker hired.
C) decrease employment until the MRP of labor equals $8.00.
D) increase the price of lamps so that the marginal revenue product increases to $8.00 per hour.

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