The Diagram Below Shows the MRP Curve for a Firm

question 22

Multiple Choice

The diagram below shows the MRP curve for a firm producing copper plumbing pipe.The factor of production being considered here is hours of labour.
FIGURE 13-1
-Refer to Figure 13-1.Suppose this profit-maximizing firm is facing MRP1 and a wage rate of $12 per hour.Now suppose there is,simultaneously,an increase in demand for copper plumbing pipe (such that MRP shifts to MRP2) ,and an increase in the wage rate to $16 per hour.The firm should

• A)employ 20 more units of labour.
• B)employ 40 more units of labour.
• C)employ the same number of units of labour.
• D)employ 40 fewer units of labour
• E)employ 20 fewer units of labour.

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