If a Firm Operates in a Competitive Labor Market and in a Non-Competitive

question 6

Multiple Choice

If a firm operates in a competitive labor market and in a non-competitive output market, then the firm faces

• A)a constant wage rate when hiring more labor and a constant price when selling more of its output.
• B)an increasing wage rate when hiring more labor but a constant price when selling more of its output.
• C)a constant wage rate when hiring more labor but a decreasing price when selling more of its output.
• D)an increasing wage rate when hiring more labor but a decreasing price when selling more of its output good.
• E)a decreasing wage rate when hiring more labor but a decreasing price when selling more of its output good.

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Definitions:

Say's Law

An economic theory that proposes supply creates its own demand, meaning production inherently creates the consumption of equivalent value.

Aggregate Supply Curve

This represents the total supply of goods and services that firms in an economy are willing to sell at a given price level during a specified time period.

Macroeconomic Equilibrium

A state where aggregate supply equals aggregate demand, resulting in a stable economy without tendencies to change.

Great Depression

A severe worldwide economic downturn that lasted from 1929 until the late 1930s, characterized by massive unemployment and deflation.