In the Short Run, Firms Expand Their Production When the Price

question 64

Multiple Choice

In the short run, firms expand their production when the price level rises because

• A) the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits.
• B) each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases.
• C) firms can increase their profits by increasing their maintenance.
• D) the money wage rate remains constant so the higher prices for their product makes it profitable for firms to expand production.

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