What is the usual response of firm to an increase in the price of what they sell?
A)An increase in output
B)An increase in hiring factors of production
C)An increase in the profit level of the firm
D)An increase in employment at the firm
E)All of these responses are correct.

Question

Quizplus · Accepted Answer

When the price of what firms sell increases, they typically respond by increasing output to sell more at the higher price, hiring more factors of production (including labor) to increase production, which in turn increases the profit level of the firm. This leads to an increase in employment to handle the higher production levels.

What Is the Usual Response of Firm to an Increase