Problem
A fall in the price of an input induces a profitmaximizing firm to experience both substitution and output effects that cause it to hire more of that input. Explain how the profit-maximizing assumption is used in explaining the direction of each of these effects. Did you have to use the assumption that the input is not inferior in your analysis? Do you think a similar statement can be made about inferior inputs?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.