Asked by Susan Hudak on Jun 13, 2024
Verified
An increase 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 firmʹs profit-maximizing level output, but not its usage of inputs.
Wage Rate
Wage Rate is the standard amount of compensation for labor, paid on an hourly, daily, or piecework basis.
Labor Hired
The process of employing individuals to perform various tasks within a business or organization.
Inputs Employed
The resources, including labor, capital, and materials, used in the production of goods and services.
- Understand how increases in wage rates affect labor demand, other input employment, and firm output levels.
Verified Answer
LA
Linda ArriolaJun 14, 2024
Final Answer :
B
Explanation :
An increase in the wage rate affects the cost of labor, which can lead to adjustments in the amount of labor employed. Firms may also alter the use of other inputs as a substitution effect, seeking to maintain production levels or reduce costs.
Learning Objectives
- Understand how increases in wage rates affect labor demand, other input employment, and firm output levels.