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Author Question: How is a firm's labor demand curve affected when the price of its product rises? What will be an ... (Read 30 times)

Lobcity

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on: Jun 30, 2018
How is a firm's labor demand curve affected when the price of its product rises?
 
  What will be an ideal response?

Question 2

Potential GDP
 
  A) might either increase or decrease as the price level increases, depending on whether aggregate demand increases or decreases.
  B) decreases as the price level increases because people demand fewer goods and services.
  C) is independent of the price level.
  D) increases as the price level increases because firms supply more goods and services.
  E) never changes.


macybarnes

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Reply #1 on: Jun 30, 2018
Answer to Question 1

If the price of a firm's product increases, it increases its supply of the product. This increases the firm's demand for labor at the existing market wage. Therefore, the firm's labor demand curve shifts to the right.

Answer to Question 2

C


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