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Would firms have an incentive to change their level of production if input prices adjusted immediately to output price changes?

Respuesta :

aencabo
Firms have noincentive to increase production to take advantage of higher prices if they simultaneously face equally higher resource prices. So the answer to this question is No. The availability and productivity of real resources is reflected in the prices of inputs, and in the long run these input prices (including wages) adjust to match changes in the price level.

Firms cannot increase the level of production to take advantage of higher prices if they face equally higher resource prices at the same time. Thus, the answer is No.

What do you mean by the level of production?

From a microeconomics perspective, a successful company needs to have a sound understanding of its overall product, product range, and intermediate product.

The availability and production of real commodities are reflected in input prices, and over time these inputs (including wages) change to match the price changes.

It does not give the firm any scope to make changes to the level of production.

Hence, The correct answer is no.

To learn more about the level of production, refer to the link:

https://brainly.com/question/25071524