As the price level rises relative to costs and the real wage rate falls,profits ________ and the number of firms in business ________.
A)increase;increases
B)increase;decreases
C)decrease;increases
D)decrease;decreases
E)do not change;do not change

Question

Quizplus · Accepted Answer

As the price level rises, firms can sell their products at higher prices while costs remain relatively lower, leading to increased profits. This encourages more firms to enter the market, increasing the number of firms in business.

As the Price Level Rises Relative to Costs and the Real