If the Demand for Labor Increases

question 41

Multiple Choice

If the demand for labor increases
I. employment increases.
II. the real wage rate increases.

• A) Only I is correct.
• B) Only II is correct.
• C) Both I and II are correct.
• D) Neither I nor II is correct.

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Definitions:

AVC

Average Variable Cost, which is the total variable cost divided by the quantity of output produced. It represents the variable cost per unit of output.

MC

Marginal Cost, which refers to the increase in total production cost that arises from producing one additional unit of a good or service.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs like opportunity costs.

ATC

Stands for Average Total Cost, which is the total cost of production divided by the quantity of output produced.