If a Firm Buys Its Labor in a Competitive Market,then

question 86

Multiple Choice

If a firm buys its labor in a competitive market,then in the short run,a decrease of the demand for the firm's product will cause the firm to

• A)offer a higher wage.
• B)hire fewer workers.
• C)hire more workers.
• D)offer a lower wage.

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Definitions:

Price Ceiling

A government-imposed limit on how high a price is charged for a product or service.

Price Control

Government-imposed limits on the prices that can be charged for goods and services in the market, aimed at managing affordability and stabilizing the economy.

Shortage

A condition in which the amount of a good offered for sale by producers is less than the amount demanded by buyers at the existing price. An increase in price would eliminate the shortage.

Price Ceiling

A legal maximum price that can be charged for a good or service, above which it cannot rise, often set by government.