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Suppose an economy has the following production function: Y = AK L where A = 10, K 50, and L= 100. %3D %3D The current nominal wage is $20 and the price level of output is $4. Based on the theory of distribution, firms should O hire new workers to increase profits. O fire some current workers to reduce losses. O keep the number of workers at the current level. O the firms labor decision cannot be determined.

Suppose an economy has the following production function: Y = AK L where A = 10, K 50, and L= 100. %3D %3D The current nominal wage is $20 and the price level of output is $4. Based on the theory of distribution, firms should O hire new workers to increase profits. O fire some current workers to reduce losses. O keep the number of workers at the current level. O the firms labor decision cannot be determined.

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Suppose an economy has the following production function: Y = AK L where A = 10, K 50, and L= 100. The current nominal wage is $20 and the price level of output is $4. Based on the theory of distribution, firms should O hire new workers to increase profits. O fire some current workers to reduce losses. O keep the number of workers at the current level. O the firms labor decision cannot be determined.
Transcribed Image Text:Suppose an economy has the following production function: Y = AK L where A = 10, K 50, and L= 100. The current nominal wage is $20 and the price level of output is $4. Based on the theory of distribution, firms should O hire new workers to increase profits. O fire some current workers to reduce losses. O keep the number of workers at the current level. O the firms labor decision cannot be determined.
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