In a hiring situation, considering that other potential costs will not change in the short run, the level of demand that maximizes profits is that level at which the _____ of the last hire is equal to the _____ for that hire.
A)demand factor; supply factor
B)marginal output; market price
C)incremental output; marginal output
D)marginal revenue; wage rate

Question

Quizplus · Accepted Answer

The question is asking about maximizing profits, which means that we should consider the marginal revenue and the cost of hiring (the wage rate). The level of demand that maximizes profits is the level at which the marginal revenue (the revenue generated from the last hire) is equal to the wage rate for that hire. Therefore, the correct answer is D, marginal revenue and wage rate.

In a Hiring Situation, Considering That Other Potential Costs Will