"A firm should continue to hire more workers as long as wages are low." Do you agree or disagree? Why?
What will be an ideal response?
Disagree. The firm should hire workers up to the point at which the additional cost associated with hiring the last worker is equal to the additional revenue generated by hiring that worker. What is ignored in the statement is the revenue associated with hiring an additional worker: Even if wages are low, the additional revenue associated with the additional worker may not be enough to cover the additional costs associated with the wages.
You might also like to view...
What are some of the solutions for a hold-up problem?
a. Mergers b. Contracts c. Exchange of ‘hostages' d. All the above
Assuming the firm in the graph is producing Q1 and charging P3, it is likely showing the cost and revenue curves of a firm in:
These are the cost and revenue curves associated with a firm.
A. the long run, and economic profits are zero.
B. the short run, and accounting profits are negative.
C. the long run, and accounting profits are zero.
D. the short run, and economic profits are positive.