Refer to the information provided in Figure 10.3 below to answer the question(s) that follow. Figure 10.3
-Refer to Figure 10.3. The market wage is initially W₀ and the firm is initially at Point A. Labor supply decreases from S₀ to S₁, if the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Question

Refer to the information provided in Figure 10.3 below to answer the question(s) that follow.

Figure 10.3
-Refer to Figure 10.3. The market wage is initially W₀ and the firm is initially at Point A. Labor supply decreases from S₀ to S₁, if the firm does not change the amount of capital it employs, the firm will move to Point ________ to maximize profits.

Quizplus · Accepted Answer

When labor supply decreases, the firm will move to a point where the new labor supply curve intersects the firm's labor demand curve, which is Point B, to maximize profits without changing capital.

Refer to the Information Provided in Figure 10