When Output Increases by 1%, the Number of Jobs Does

question 284

Multiple Choice

When output increases by 1%, the number of jobs does not tend to rise by 1% in the short run. Which of the following statements represents one of the reasons why this is true?

• A) A firm is likely to meet some of the increase in output by increasing the number of hours worked per job.
• B) A firm is likely to meet some of the increase in output by decreasing the number of hours worked per job.
• C) Firms are likely to meet some of the increase in output by reducing labor productivity.
• D) Firms are likely to meet part of the increase in output by eliminating any excess capital they may have.

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Definitions:

Wage Rate

The amount of compensation a worker receives per unit of time (e.g., hour, day) or per task completed.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production.

Purely Competitive

A market structure characterized by many sellers offering identical products, leading to a high degree of competition.

Purely Competitive

A market structure characterized by many buyers and sellers, with all firms selling identical products and no single buyer or seller able to influence the market price.