Suppose a Competitive Firm Is Paying a Wage of $12

question 59

Multiple Choice

Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit.Assume that labor is the only input.If the last worker hired increases output by three units per hour, then to maximize profits the firm should

• A)not change the number of workers it currently hires.
• B)lay off one or more of its workers.
• C)hire additional workers.
• D)There is not enough information to answer the question.

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Definitions:

High Differentiation

A situation in organizations where there is a large variance in the nature of roles, responsibilities, and levels of authority.

Organizational Units

Subdivisions within an organization, defined by their specific functions, responsibilities, and roles.

Functional Departmentation

Employees with closely related skills and responsibilities are assigned to the same department.

Product Departmentation

Departments are formed on the basis of a particular product, product line, or service.