Suppose a Competitive Firm Pays a Wage of $12 an Hour

question 159

Multiple Choice

Suppose a competitive firm pays a wage of $12 an hour and sells its product at $3 per unit.Assume that labor is the only input.If hiring another worker would increase output by five units per hour, then to maximize profits the firm should

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

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Definitions:

Problem Solver

A person or tool that identifies issues and devises methods to resolve them effectively.

Involving Phase

A stage in a process that encompasses direct engagement and participation of stakeholders or participants.

Small Talk

Casual or informal conversation about non-specific topics, usually meant to create a friendly atmosphere.

Acute Care Setting

A health care environment where patients receive immediate and short-term treatment for severe injuries or episodes of illness.