Multiple Choice
A monopolist is currently hiring 5,000 units of labor.At this level,the marginal revenue of output is $10,the (fixed) wage rate is $300,and the marginal product of labor is 50.In order to maximize profit,the firm should
A) keep the level of employment the same because the firm is earning a profit of $100,000.
B) hire more labor because the next unit of labor increases profit by $500.
C) hire more labor because the next unit of labor increases profit by $200.
D) hire less labor because the last unit of labor added more to total cost ($300) than to total revenue ($10) .
Correct Answer:
Verified
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