Question

Seamstresses at Rear Gear, a large maker of backpacks, have become more productive due to the firm’s recent purchase of new sewing machines. Because Rear Gear is a profit-maximizing firm, it will:

Answer 1

Hire more labor and increase the output.

Step-by-step explanation:

Because Rear Gear is a profit-maximizing firm, it will hire more labor and increase the output.

This is because, when the firm has purchased a new sewing machine, they need to produce more in order to capture the fixed cost of production (i.e. cost of sewing machine). In order to do so, they need to hire more workers or labour to increase the total output.