Given a 10 Percent Increase in Wages,firm a Cuts Back

question 97

Multiple Choice

Given a 10 percent increase in wages,firm A cuts back on labor more than firm B.It follows that,ceteris paribus,

• A) firm A has a higher labor cost-total cost ratio than firm B.
• B) firm B has a higher labor cost-total cost ratio than firm A.
• C) the elasticity of demand for labor is higher for firm B than firm A.
• D) firm B has higher fixed costs than firm A.
• E) firm A has higher per-unit costs than firm B.

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Definitions:

Plant Asset

Long-term physical assets used in the operation of a business that are not intended for resale, such as buildings, machinery, and equipment.

Competitive Advantage

A condition or circumstance that puts a company in a favorable or superior business position compared to its competitors.

Inventions

Novel and unique creations or discoveries that are the result of human creativity and ingenuity.

Depreciation Method

A systematic approach used to allocate the cost of a tangible asset over its useful life, reflecting wear and tear, obsolescence, or age.