Which of the following is an example of changes along the intensive margin?
A) A firm hires more workers because demand for the good has increased.
B) A new firm closes because a recession causes sales to drop too low.
C) A worker leaves her job to stay at home with her children.
D) After the iPhone was developed,several competitors entered to earn a profit.
E) Consumers demand more high-definition TVs,so the price of other types of
TVs decreases.

Question

Quizplus · Accepted Answer

Changes along the intensive margin refer to adjustments made by firms within their existing operations, such as changes in the quantity of inputs used (e.g. hiring more workers) or changes in the technology used to produce a good. Option A describes a firm hiring more workers to respond to an increase in demand, which is an example of a change along the intensive margin. The other options describe changes along either the extensive margin (B, D) or the exit margin (C), or do not describe changes within the firm's existing operations (E).

Which of the Following Is an Example of Changes Along