Refer to the information provided in Figure 10.2 below to answer the question(s) that follow. Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

Question

Refer to the information provided in Figure 10.2 below to answer the question(s) that follow.

Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC₀ to MC₁. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.

Quizplus · Accepted Answer

When a firm's marginal cost curve shifts, it indicates a change in the cost of producing additional units of output. If the shift suggests that the firm can produce at a lower marginal cost, the firm would increase its output to maximize profits. Increasing output typically requires more labor, hence the firm would also increase its demand for labor.

Refer to the Information Provided in Figure 10