If only one firm in an industry could take advantage of a reduced wage and all other firms continue paying the old wage, how would one best describe the one firm's reaction to this reduced wage assuming labor is the only variable input? The
marginal revenue product of labor curve A) would remain unchanged, and the firm would hire more labor at the lower wage.
B) shifts to the left, and the firm hires more labor at the lower wage on the new curve.
C) shifts to the right, and the firm hires more labor at the lower wage on the new curve.
D) shifts to the left, and the firm hires less labor at the lower wage on the new curve.
E) shifts to the right, and the firm hires less labor at the lower wage on the new curve.
A
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When firms decide how much labor to hire, one of the factors that influences them is the
A) nominal wage rate plus the inflation rate. B) nominal wage rate divided by the price level and then multiplied by 100. C) nominal wage rate minus the inflation rate. D) real wage rate plus the inflation rate. E) nominal wage rate divided by the inflation rate and then multiplied by 100.
Based on the graph showing a contractionary policy response to a negative supply shock, a decrease in aggregate demand leads to ______.
a. increased inflation and decreased unemployment
b. increased output and prices, and decreased unemployment
c. decreased output and prices, and increased unemployment
d. increased output and increased prices