An Increase in Productivity Will Cause Which of the Following

question 30

Multiple Choice

An increase in productivity will cause which of the following according to the price-setting behavior of firms?

• A)a reduction in prices set by firms
• B)an increase in the real wage paid by firms
• C)a reduction in the markup set by firms
• D)all of the above
• E) none of the above

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Definitions:

Demand Curve

An illustrated diagram indicating how consumer demand for a product varies with changes in its price.

Output Quantity

The amount of goods or services produced by a company, industry, or economy within a specific period.

MR = MC Rule

The principle that a firm will maximize its profit (or minimize its losses) by producing the output at which marginal revenue and marginal cost are equal, provided product price is equal to or greater than average variable cost.