Suppose a Competitive Firm Pays a Wage of $12 an Hour

question 25

Multiple Choice

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If hiring another worker would increase output by five units per hour, then to maximise profits the firm should

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