In the short run, an increase in the price level induces firms to expand production because
A) they can increase profits by increasing maintenance costs.
B) higher prices allow firms to hire more inputs by offering higher prices for inputs, which increases productivity and profits.
C) each firm must keep its production level up to the level of its rivals, and some firms will expand production as the price level increases.
D) prices of inputs are held constant, so the higher prices for firms' products imply that it is profitable to expand production.
D
You might also like to view...
Although most slaves came to the colonies before 1776, the majority of other types of labor came to North America voluntarily
Indicate whether the statement is true or false
A firm's demand curve for labor coincides with the:
A. marginal cost curve. B. average cost curve. C. marginal revenue curve. D. marginal revenue product curve.