3. Suppose that in a competitive output market, firms hire labor from a competitive labor market (so that
the profit maximization conditions for hiring labor are as we discussed in class). If a
profit-maximizing
firm in this market gets an improvement in technology that increases the marginal product of
labor for
any
given unit of labor it employs, and if the market wage stays constant, we would expect
a. the firm to hire fewer units of labor (i.e., workers) because it could produce more than before
with fewer people.
b. the firm to keep the number of units of labor the same.
c. offer a lower wage and hire fewer units of labor.
d. hire more units of labor.
e. none of the above.

answer the question and create a graph illustrating why

Answer :

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