DOC009.pdf- TurboPOF FILE HOME CONVERT EDIT ORGANIZE COMMENT VIEW FORM PROTECT S
ID: 1159230 • Letter: D
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DOC009.pdf- TurboPOF FILE HOME CONVERT EDIT ORGANIZE COMMENT VIEW FORM PROTECT SHARE HELP unk& Join Text Spellcheck Web Links, Link ?Fie Attachment uImage Annotation Select- Edit Edt (a Zoom' Text Object Add Opacity Bookmark Audio &video; Tools Edt Content Font Paragraph Effect Links Insert Carta de auspicio DEVA. DOC009.pdf . 400 The next three questions refer to the following figure, showing the marginal revenue product (MRP) and the average revenue product (ARP) curves of a perfectly competitive firm hiring a single variable input, labor 30. If the wage is $20, how many workers will the firm hire? a. 225 b. 175 c. 200 8/16 IGLESIA (GJ L e ?DOC009.pdf* ESP US 242 p. m. 06/25/2018 The Next Three...Explanation / Answer
30. If the wage is $20, then the firm will hire the number of workers corresponding to the wage of $20 on MRP curve. Hence the correct answer is (B) i.e 175 workers.
31. Similarly, if the wage is $15, the firm will hire 200 workers. Hence the correct answer is (D).
32. The shutdown point is the intersection of ARP and MRP curves. Hence if the wage is above $35, the firm will shut down and hire zero firms in the short run.
34. In a perfectly competitive market, when a firm sells another unit output, the addition to total revenues is equal to the market price. Hence the correct answer is (C). Option (A) is incorrect because a firm faces perfectly elastic demand curve due to the small size of the firms and not due to unrestricted entry and exit. Option (B) is incorrect because, when a firm raises its price, it loses all its customers. Hence the correct answer is (C).
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