Suppose Jodi's Widget Business Is Using Two Inputs, Labour and Capital

question 80

Multiple Choice

Suppose Jodi's widget business is using two inputs, labour and capital. Which of the following would happen if the price of labour increased?

• A) Jodi would hire more labour.
• B) The firm's marginal cost curve will remain unchanged.
• C) The firm's average total cost curve will shift upward.
• D) The firm's average fixed cost curve will shift upward.
• E) Jodi will shut down her business.

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Definitions:

Price Reduction

A decrease in the selling price of a product or service, often to increase demand or sales volume.

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific segment or department within a company.

Net Operating Income

Net operating income reflects a company’s financial performance by showing profit calculated from its core business operations, excluding taxes and interest expenses.

Price Reduction

A decrease in the selling price of a product or service, often used as a strategy to increase demand or sales volume.