Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3
-Refer to Figure 10.3. The market wage is initially W₁ and the firm is initially at Point B. Labor supply increases from S₁ to S₀. If the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Question

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.

Figure 10.3
-Refer to Figure 10.3. The market wage is initially W₁ and the firm is initially at Point B. Labor supply increases from S₁ to S₀. If the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Quizplus · Accepted Answer

The firm will move to Point A to maximize profits because at this point, the marginal cost of labor is equal to the marginal revenue product of labor.

Refer to the Information Provided in Figure 10