When the wage rate falls, profit-maximizing firms have an incentive to stop using capital production processes entirely O hire fewer workers and buy more plant and equipment O substitute labor for capital in production processes O raise product prices in order to raise profits through both higher prices and reduced labar costs O make no change in production and price decisions and take the decrease in labor costs asS 2D increase in profits the correct reespeuse

When the wage rate falls, profit-maximizing firms have an incentive to stop using capital production processes entirely O hire fewer workers and buy more plant and equipment O substitute labor for capital in production processes O raise product prices in order to raise profits through both higher prices and reduced labar costs O make no change in production and price decisions and take the decrease in labor costs asS 2D increase in profits the correct reespeuse

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter11: The Firm: Production And Costs

Section: Chapter Questions

Problem 15P

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Question In the short run, a firm operates a factory which it leases for $2000 per annum. To increase output, the firm employs increasing amounts of labour at a wage rate of $500 per worker. The table below shows the relationship between the amount of labour employed and the amount of output produced in the factory. Labour Output (TPPP) APP MMP VC FC TC ATC MC 0 0 ____ ___ 0 _ _ 1 15 2 50 3 80 4 100 5 110 6 115 1. Plot the APP and MPP curves on the same graph 2. Plot the ATC and MC curves on the same graph
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