If Only One Firm in an Industry Could Take Advantage

question 97

Multiple Choice

If only one firm in an industry could take advantage of a reduced wage and all other firms continue paying the old wage, how would one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? The marginal revenue product of labor curve:

• A) would remain unchanged, and the firm would hire more labor at the lower wage.
• B) shifts to the left, and the firm hires more labor at the lower wage on the new curve.
• C) shifts to the right, and the firm hires more labor at the lower wage on the new curve.
• D) shifts to the left, and the firm hires less labor at the lower wage on the new curve.
• E) shifts to the right, and the firm hires less labor at the lower wage on the new curve.

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Definitions:

Human-Brain Activity

The processes and functions of the brain, including cognitive and neurological activities, that enable consciousness, perception, thinking, judgement, and memory.

Unconscious Intuition

The process of understanding or making decisions without the awareness of the reasoning behind them.

Conscious Deliberation

The process of carefully considering or thinking about something in a systematic way.

Self-Serving Bias

The common human tendency to attribute one's successes to personal attributes and failures to external factors.