Suppose That in January a Profit-Maximizing Firm Has 25 Employees

question 32

Multiple Choice

Suppose that in January a profit-maximizing firm has 25 employees.By February,the firm has decreased employment.One can infer that,when 25 employees are hired,the

• A) firm is losing market share.
• B) firm is minimizing losses.
• C) wage exceeds the value of the marginal product of labor.
• D) value of the marginal product of labor exceeds the wage.

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Definitions:

Actual Inflation

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

Natural Rate

The level of any economic factor, such as unemployment or interest rates, that is unaffected by short-term fluctuations and is determined by long-term factors.

Aggregate-Supply Curve

A curve that shows the quantity of goods and services that firms choose to produce and sell at each price level

Trade-Off

An exchange where getting something of value requires giving up something else of value, typically used in the context of making decisions with limited resources.