If the Wage Rate Increases and Firms in a Perfectly

question 329

Multiple Choice

If the wage rate increases and firms in a perfectly competitive industry are hiring labor, then

• A) the firms will quit using labor.
• B) profits will increase.
• C) market supply will decrease.
• D) market price will decrease.

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Definitions:

Board Metres

A unit of measure used in the lumber industry to quantify the volume of wood.

Ideal Standards

Theoretical cost benchmarks assuming perfect operating conditions, used for planning and control.

Standard Cost System

An accounting method that applies predetermined costs to production and inventory rather than historical costs, to help managers control costs.

Direct Materials

These are specified components that can be easily identified and measured as part of the cost of creating a product or service.