An Increase in the Demand for a Firm's Output

question 4

Multiple Choice

An increase in the demand for a firm's output

• A) decreases the prosperity of the firm but increases the prosperity of the factors hired by the firm.
• B) decreases the prosperity of both the firm and the factors hired by the firm.
• C) increases the prosperity of both the firm and the factors hired by the firm.
• D) increases the prosperity of the firm but decreases the prosperity of the factors hired by the firm.

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Definitions:

Nominal Wage

The wage paid to labor in current dollar terms, without adjustment for inflation.

Goods and Services

The output of an economy that fulfills consumer needs, with goods being tangible products and services being intangible activities performed for consumers.

Nominal Wage

The amount of money paid to an employee without adjustments for inflation or purchasing power, expressed in current currency terms.

Real Wage

The purchasing power of an individual's earnings, taking into account the effects of inflation.