Suppose a competitive firm is paying a wage of $12 an hour and sells its product at $3 per unit.Assume that labour is the only input.If hiring another worker would increase output by three units per hour, then to maximize profits the firm should

Question

Quizplus · Accepted Answer

The additional revenue from hiring another worker is $9 (3 units * $3 per unit), which is less than the wage cost of $12. Therefore, hiring another worker would decrease profits.

Suppose a Competitive Firm Is Paying a Wage of $12