Assume That Labor Is a Variable Input

question 121

Multiple Choice

Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n)

• A) increase in marginal cost for firms in the industry and an increase in the industry supply curve.
• B) decrease in marginal cost for firms in the industry and a decrease in the industry supply curve.
• C) decrease in marginal cost for firms in the industry and an increase in the industry supply curve.
• D) increase in marginal cost for firms in the industry and a decrease in the industry supply curve.

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Definitions:

Transportation Costs

Expenses incurred in the process of moving goods from production locations to consumers, including costs associated with shipping, freight, and logistics.

Minimize

The process of reducing something to its smallest possible level or amount.

Supply Chains

Supply chains encompass the entire process of producing and delivering a product or service, from the initial sourcing of materials to the final distribution to consumers.

Economies of Scale

Cost advantages that enterprises obtain due to their scale of operation, leading to reduced costs per unit.