Suppose a Competitive Firm Is Paying a Wage of $12

question 196

Multiple Choice

Suppose a competitive firm is paying a wage of $12 an hour.Assume that labour is the only input.If hiring another worker would increase output by four units per hour, then to maximise profits the firm should

• A)not change the number of workers it currently hires.
• B)hire the extra worker.
• C)lay off some workers.
• D)There is not enough information to answer the question.

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Definitions:

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