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A firm in a competitive industry faces a market price for output of $20 and a wage rate of $500. At the current level of employment (50 units of labor), the marginal product of labor is 30. In order to maximize profit, the firm should
a. hire less labor because hiring the last unit of labor decreased profit by $500.
b. hire less labor because the firm is suffering a loss of $25,000.
c. hire more labor because hiring another unit of labor would increase profit by $100
d. keep the level of employment the same because the firm is earning a profit of $500.
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Activity-based costing (ABC):
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