Comfy Clothing Is Thinking of Hiring Tom

question 37

Multiple Choice

Comfy Clothing is thinking of hiring Tom.If hired,he can increase total production by 100 units a week.He would cost the firm $1,500 a week in wages.If the price of each unit is $20,

• A)​The MR of hiring the worker is $1,500
• B)The MC of hiring Tom is $1,500
• C)The firm should hire Tom since MR>MC
• D)​All the above

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Definitions:

Deflationary Gap

A situation in economics where actual production is lower than the potential output level, often resulting in unemployment and unused productive capacity.

Equilibrium GDP

The level of Gross Domestic Product where aggregate supply equals aggregate demand in an economy.

Full Employment GDP

The output level produced by the economy when all available resources are efficiently employed, representing potential GDP under full employment.

Multiplier

In economics, a factor that quantifies the impact of spending changes in an economy, particularly the increase in income or economic activity resulting from an injection of spending.