Refer to the information provided in Figure 10.2 below to answer the questions that follow. Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1 A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.
A) increase; increase
B) increase; decrease
C) decrease; decrease
D) keep constant; increase

Question

Refer to the information provided in Figure 10.2 below to answer the questions that follow.  Figure 10.2
-Refer to Figure 10.2. This firm's marginal cost curve has shifted from MC0 to MC1 A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.
A) increase; increase 
B) increase; decrease 
C) decrease; decrease 
D) keep constant; increase

Quizplus · Accepted Answer

When the marginal cost curve shifts from MC0 to MC1, it indicates a decrease in marginal costs. A profit-maximizing firm will increase output to take advantage of lower costs and will likely increase its demand for labor to produce the additional output.

Refer to the Information Provided in Figure 10