CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

If a firm observes that the marginal revenue product of labor exceeds the wage at the current level of hours, the firm is likely to ______
A. decrease the hours of labor.
B. increase the hours of labor.
C. raise wages.
Explanation: The firm will maximize profits when marginal revenue product is equal to the wage. Since marginal revenue product is decreasing, if it is greater than the wage, the firm can increase profits through increasing labor hours.

User Contributed Comments 3

User Comment
aniketcpp any explanation plz ?
jasonkwk work.. work. work... Warcraft grunt sound..
Paul7059 Nice one Jasonkwk
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