If Labour Productivity Increases by 15 Percent,under Which of the Following

question 73

Multiple Choice

If labour productivity increases by 15 percent,under which of the following circumstances will a change in wages lead to a decrease in short-run aggregate supply?

• A)if wages increase by 20 percent
• B)if wages increase by 15 percent
• C)if wages increase by 10 percent
• D)if wages are stable

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Definitions:

Fixed Costs

Expenses that do not change with the level of production or sales, such as rent, salaries, and insurance, essential for budgeting and financial planning.

Variable Cost

Costs that vary directly with the level of production or service provision, such as materials and labor.

Break-Even Analysis

A financial calculation to determine the sales volume at which total revenues equal total costs, resulting in no profit or loss.

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent or salaries.