In the Short Run, Firms Expand Their Production When the Price

question 19

Multiple Choice

In the short run, firms expand their production when the price level rises because

• A)the money wage rate remains constant so the higher prices for their product makes it profitable for firms to expand production.
• B)each firm must keep its production up to the level of its rivals, and some firms will expand production as the price level increases.
• C)firms can increase their profits by increasing their maintenance.
• D)the higher prices allow the firm to hire more workers by offering higher wages, thereby increasing productivity and profits.

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Definitions:

Presentation

A demonstration or display of information in a structured format, typically to an audience.

Salivation

The secretion of saliva in the mouth, which can be stimulated by the sight, smell, thought, or taste of food.

Unconditioned Response

A naturally occurring reaction to an unconditioned stimulus that does not require learning.

Conditioned Response

A learned reaction to a previously neutral stimulus that occurs after repeated association with an unconditioned stimulus.