In the Short Run, a Profit Maximizing Firm Will Respond

question 26

Multiple Choice

In the short run, a profit maximizing firm will respond to a reduction in the wage rate by

• A)Hiring more labor
• B)Hiring more capital
• C)Hiring less labor
• D)Decreasing output

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Definitions:

Parent Company

A corporation that owns a majority of the shares of another company, thus controlling management and operations.

Controlled Company

A company in which a majority of its stock is owned or its operations are controlled by another entity.

Investee Company

A company in which another company (the investor) holds a significant stake but does not have controlling interest.

Parent Company

An entity that owns enough voting stock in another corporation to control its management and operations.