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The Assumption That a Firm Operates in a Competitive Labor

Question 3

Multiple Choice

The assumption that a firm operates in a competitive labor market means that the firm


A) offers a real wage rate that is indexed for inflation.
B) faces an upward-sloped marginal cost of labor curve.
C) faces a downward-sloped marginal cost of labor curve.
D) faces a constant wage regardless of how much labor it employs.
E) does not use capital in the production process.

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