If a firm buys its labor in a competitive market,then in the short run,a decrease of the demand for the firm's product will cause the firm to
A)offer a higher wage.
B)hire fewer workers.
C)hire more workers.
D)offer a lower wage.

Question

Quizplus · Accepted Answer

If the demand for the firm's product decreases, the firm will have less revenue and less need for labor. Thus, it will hire fewer workers to decrease its costs and maintain profitability. Offering a higher wage would increase costs, and hiring more workers would not be logical if the demand for the product is decreasing. Offering a lower wage could be a potential strategy, but it is not the most effective solution in the short run.

If a Firm Buys Its Labor in a Competitive Market,then