The Diagram Below Shows the MRP Curve for a Firm

question 113

Multiple Choice

The diagram below shows the MRP curve for a firm producing high school math textbooks. The factor of production being considered here is hours of labour. FIGURE 13- 2
-Refer to Figure 13- 2. 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 math textbooks (such that MRP shifts to MRP2) , and an increase in the wage rate to $16 per hour. The firm should

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

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Definitions:

Conformity

The act of matching attitudes, beliefs, and behaviors to group norms or expectations.

Social Loafing

The phenomenon where individuals exert less effort when working in a group compared to when working alone, due to perceived diffusion of responsibility.

Groupthink

Groupthink is a psychological phenomenon where the desire for harmony and conformity within a group leads to irrational or dysfunctional decision-making outcomes.

Democratic

Relating to or supporting democracy or its principles, where power is vested in the people and exercised directly by them or by their elected agents under a free electoral system.