Explain How the Optimal Usage of the Variable Input, Labor

question 50

Essay

Explain how the optimal usage of the variable input, labor, will change in response to the following changes in the short-run:
(a) A drop in the price of the good or service that the firm sells
(b) A drop in the hourly wage
(c) A decline in the productive efficiency of labor

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Definitions:

Retained Earnings

The portion of net income that is kept by the company rather than distributed to its shareholders as dividends.

Contributed Surplus

The value of anything of value that is given to a company in exchange for shares, above the par value of the shares.

Net Income

The total profit of a company after all expenses, including taxes and interest, have been deducted from total revenue.

Retained Earnings

Retained earnings are the accumulated net profits that a company chooses to keep rather than distribute to shareholders as dividends, often reinvested in the business.