Suppose a Competitive Firm Is Paying a Wage of $12

question 243

Multiple Choice

Suppose a competitive firm is paying 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 three units per hour, then to maximise profits the firm should

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

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Definitions:

Clothing Tax

A specific tax imposed on the sale or purchase of clothing, which can vary by jurisdiction.

Proportional Tax

A tax system where the tax rate remains constant regardless of the amount subject to tax.

Federal Income Tax

Tax levied by the national government on the annual income of individuals, corporations, trusts, and other legal entities.

Income Distribution

How a nation's total GDP is distributed amongst its population, often used to analyze economic inequality.