Refer to the Data Provided in Table 10

question 129

Multiple Choice

Refer to the data provided in Table 10.3 below to answer the following question(s) .
Table 10.3
-Refer to Table 10.3. The firm currently employs 4 workers at the market wage of $480 per worker per day. If the firm wants to maximize its profits, it should

• A) hire fewer workers
• B) hire more workers.
• C) make no adjustments as it is already employing the profit-maximizing number of workers.
• D) shut down since it is incurring a loss.

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Definitions:

Corporate Profits

The surplus income of corporations after all expenses have been met, indicative of corporate health.

Inflationary Gap

Occurs when equilibrium GDP is greater than full-employment GDP.

Equilibrium GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand, indicating a stable economy with no tendency for change in the price level or output.

Multiplier

Any change in spending (C, I, or G) will set off a chain reaction leading to a multiplied change in GDP. Equation is 1/(1 - MPC).