If Labor Costs Are 60 Percent of Production Costs,then a 15

question 70

Multiple Choice

If labor costs are 60 percent of production costs,then a 15 percent increase in wage rates would increase production costs by:

• A) 60 percent.
• B) 45 percent.
• C) 15 percent.
• D) 9 percent.
• If total production costs are $100,labor's share is $60.If wages go up 15 percent,the wage bill becomes $60 * 1.15 = $69.Total production costs rise to $109,which is a 9 percent increase.

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