Consider a BMW automobile plant. If the price of BMWs increase by 10 percent and the money wage rate and other costs ________, there will be ________.
A) increase by 10 percent; an increase in BMWs profits
B) do not change; an increase in BMW's production and profit
C) increase by 10 percent; an increase in BMWs production
D) do not change; no change in production

Question

Quizplus · Accepted Answer

If the price of BMWs increases by 10 percent while the money wage rate and other costs remain unchanged, BMW's profit margins on each car sold would increase, leading to higher profits. This could also incentivize an increase in production to take advantage of the higher profit margins.

Consider a BMW Automobile Plant