Author Question: If only one firm in an industry could take advantage of a reduced wage and all other firms continue ... (Read 39 times)

stock · **on:** Jul 1, 2018

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.

Question 2

Which of the following can be thought of as a barrier to entry?

A) scale economies.
B) patents.
C) strategic actions by incumbent firms.
D) all of the above