A Firm Operating in Competitive Input and Output Markets Purchases

question 1

Multiple Choice

A firm operating in competitive input and output markets purchases new technology, which shifts the total product schedule from A to B, as shown in the data in the table. At the market wage rate of $30 and product price of $5, this firm will

• A)hire the same number of laborers in both situations.
• B)increase the number of laborers hired from 4 to 6.
• C)decrease the number of laborers hired from 4 to 3.
• D)increase the number of laborers hired from 4 to 5.

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Definitions:

Capital

Financial assets or the resources that businesses use to fund their operations and growth, including cash, properties, and equipment.

Equipment Purchase

The acquisition of physical assets, such as machinery or tools, used in the operation of a business.

Down Payment

An initial upfront payment made when purchasing an item, especially real estate, which is part of the total purchase price.

On Account

A transaction where goods or services are provided with an agreement that payment will be made at a later date.