A decrease in the wage rate will change
A) only the amount of labor hired.
B) the amount of labor employed, and it may also change the amount of other inputs employed.
C) the price the firm charges for the product, but it will not affect the demand for any of the inputs.
D) the firm's profit-maximizing level output, but not its usage of inputs.

Question

Quizplus · Accepted Answer

A decrease in the wage rate affects the cost of labor, which can lead to changes in the amount of labor hired. Additionally, firms may adjust their use of other inputs in response to the change in labor costs, as they seek to optimize their production processes and costs.

A Decrease in the Wage Rate Will Change