A consultant interviews the hiring manager of a small, profit-maximizing firm. The manager explains that the firm used to have 15 employees but decided not to rehire when the most-recently-hired employee left the company, so the firm now has 14 employees. We can infer that

Question

Answer

the firm is too small and should rehire to replace the 15th employee.

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for the 15th employee, the value of the marginal product of labor exceeded the wage.

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the firm is no longer attempting to maximize profits.

Answer

for the 15th employee, the wage exceeded the value of the marginal product of labor.

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A consultant interviews the hiring manager of a small, profit-maximizing firm. T...

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