A fall in the real wage rate ________ firms' profits and leads to ________ in the quantity supplied.
A)raises;a decrease
B)does not change;no change
C)lowers;an increase
D)raises;an increase
E)lowers;a decrease

Question

Quizplus · Accepted Answer

A fall in the real wage rate reduces labor costs for firms, which can increase their profits and incentivize them to supply more, leading to an increase in the quantity supplied.

A Fall in the Real Wage Rate ________ Firms' Profits