In Theory, If a Profit-Maximizing Firm in a Perfectly Competitive

question 36

Multiple Choice

In theory, if a profit-maximizing firm in a perfectly competitive labor market found it advantageous to hire one less worker, the firm should pay a

• A) lower wage rate but only to the most recently hired workers.
• B) higher wage rate but only to the most recently hired workers.
• C) lower wage rate to all previous workers hired.
• D) higher wage rate to all previous workers hired.

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Definitions:

Investment

The allocation of resources, usually financial, in expectation of generating an income or profit.

Portfolio Expected Return

The weighted average of the expected returns of the assets in an investment portfolio.

Equal Investment

A strategy where equal amounts of capital are allocated to each investment within a portfolio.

Stocks

Shares of ownership in a company that represent a claim on part of the company's earnings and assets.