A Firm Is Both Hiring Labor and Selling Output in Purely

question 6

Multiple Choice

A firm is both hiring labor and selling output in purely competitive markets and is maximizing profits.It is currently operating in the elastic range of its MRP curve.If the wage rate increases,its total spending on wages at the new equilibrium will:

• A) be larger.
• B) be smaller.
• C) be unchanged.
• D) change,but it is impossible to determine the direction.

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Definitions:

Common Fixed Expenses

Costs that do not change with the level of production or sales over a certain period and are shared among different segments or products of a business.

Total Fixed Expenses

Expenses that do not fluctuate with changes in production level or sales volume, such as rent, salaries, and insurance.

Net Operating Income

The profit a company makes after deducting operating expenses, excluding interest and taxes.

Break-Even

The point at which total costs and total revenues are equal, resulting in neither profit nor loss.