Question 1
Refer to the information provided in Figure 10.2 below to answer the question(s) that follow.
Refer to Figure 10.2. This firm's marginal cost curve has shifted from
MC
0 to
MC
1. A profit-maximizing firm should ________ the amount of output produced and ________ its demand for labor.
◦ increase; increase
◦ increase; decrease
◦ decrease; decrease
◦ keep constant; increase
Question 2
Refer to the information provided in Figure 10.2 below to answer the question(s) that follow.
Refer to Figure 10.2. This firmʹs marginal cost curve has shifted from
MC
1 to
MC
0. A likely explanation for this is that
◦ the productivity of a variable input increased.
◦ the price of a variable input increased.
◦ the demand for the firmʹs product increased.
◦ the supply of a variable input increased.
Question
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