The following table shows output per hour produced by the different units of labor.Table 14.1
The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue.
-After hiring 151 units of the variable input (say labor) a firm determines the marginal fixed cost (MFC) to be $0.33 and the marginal revenue product (MRP) to be $0.30. The firm should:
A)increase its production.
B)increase the use of labor.
C)decrease the use of labor.
D)produce 151 units.
E)produce 33 units of the output.

Question

The following table shows output per hour produced by the different units of labor.Table 14.1
The marginal revenue product of a resource is equal to the product of the marginal product of an input and marginal revenue. 
-After hiring 151 units of the variable input (say labor) a firm determines the marginal fixed cost (MFC) to be $0.33 and the marginal revenue product (MRP) to be $0.30. The firm should:
A)increase its production. 
B)increase the use of labor. 
C)decrease the use of labor. 
D)produce 151 units. 
E)produce 33 units of the output.

Quizplus · Accepted Answer

The MRP of labor is less than the MFC, which indicates that the firm is incurring losses by hiring the additional units of labor. Therefore, the firm should decrease the use of labor in order to minimize its losses.

The Following Table Shows Output Per Hour Produced by the Different