Mr Smith's Firm Competes in a Perfectly Competitive Market

Multiple Choice

Mr. Smith's firm competes in a perfectly competitive market. The firm is currently hiring 30 workers. The value of marginal product of the last worker is $7.00 per hour. The wage rate is $8.00 per hour. To increase profit, Mr. Smith should

A) continue hiring 30 workers because the firm earns a surplus of $1.00 on each worker hired.
B) increase the price of the firm's product so that the value of marginal product increases to $8.00 per hour.
C) decrease the price of the firm's product so that the value of marginal product increases to $8.00 per hour.
D) decrease the number of workers until the value of marginal product of labour equals $8.00.
E) increase the number of workers until the value of marginal product of labour equals $8.00.