Suppose a Competitive Firm Is Paying a Wage of $12

question 17

Multiple Choice

Suppose a competitive firm is paying 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 three units per hour, then to maximize profits the firm should

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

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Definitions:

Capital Balances

The amounts of money that the owners of a company have contributed to it or have accumulated over time.

Unlimited Liability

A legal structure in business where the owners are personally responsible for all the debts and liabilities of the business.

Mutual Agency

A principle in partnerships where each partner has the authority to bind the partnership to contracts within the scope of the business's operations.

Limited Life

A term that refers to the finite existence of a business entity or an asset's useful life.