Suppose a Competitive Firm Pays a Wage of $12 an Hour

question 159

Multiple Choice

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit.Assume that labor is the only input.If hiring another worker would increase output by five units per hour, then to maximize profits the firm should

• A)not change the number of workers it currently hires.
• B)lay off some of its workers.
• C)hire the additional worker.
• D)There is not enough information to answer the question.

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Definitions:

Intangible Assets

Non-physical assets possessing value, such as patents, trademarks, copyrights, and goodwill, often representing a significant part of a company's asset base.

Aging Assets

Refers to the process by which assets, especially tangible fixed assets, decrease in operational efficiency and value over time due to wear and use.

Financial Statement Analysis

The process of reviewing and evaluating a company's financial statements to make informed decisions about its financial health and performance.

Inflation

The rate at which the general level of prices for goods and services is rising, eroding purchasing power.