In the short run,the competitive firm will hire more labor if
A) the wage rate increases.
B) the price the firm receives for the output increases.
C) the price the firm receives for the output decreases.
D) a specific tax is imposed on the output.

Question

Quizplus · Accepted Answer

In the short run, a competitive firm will hire more labor if the price it receives for its output increases. This is because the higher price can lead to higher revenue and potentially higher profits, making it more cost-effective to produce more goods and, therefore, to hire more labor to increase production.

In the Short Run,the Competitive Firm Will Hire More Labor