Asked by Attila Szalay on Jun 07, 2024
Verified
Other things equal,if the wage rates paid to a firm's labor inputs were to rise,we would expect the:
A) AFC,AVC,ATC,and MC curves all to rise.
B) AVC,ATC,and MC curves all to rise.
C) AFC and ATC curves to fall.
D) MP curve to fall.
Wage Rates
The standard amount of pay given to workers per unit of time (hourly, daily, etc.) for their labor.
Labor Inputs
The work effort provided by employees that is used in the production process of goods and services.
AFC
Average Fixed Cost, which is the fixed cost of production divided by the quantity of output produced, illustrating how fixed costs dilute over larger production volumes.
- Understand the effects of alterations in wage rates on cost curve dynamics.
Verified Answer
JP
Joseph PalezyanJun 13, 2024
Final Answer :
B
Explanation :
If the wage rates paid to a firm's labor inputs were to rise, the variable cost of production (labor cost) would increase. This would lead to an increase in the AVC (average variable cost), ATC (average total cost), and MC (marginal cost) curves as they are all influenced by the variable cost. However, the AFC (average fixed cost) curve would not be affected as fixed costs do not change with changes in the level of output. The MP (marginal product) curve is unrelated to changes in wage rates and would not be affected.
Learning Objectives
- Understand the effects of alterations in wage rates on cost curve dynamics.