Suppose That Productivity Increases as Workers' Health Improves

question 64

Multiple Choice

Suppose that productivity increases as workers' health improves. This increase in productivity will:

• A) cause a movement up the short-run aggregate supply curve from left to right.
• B) cause a movement down the short-run aggregate supply curve from right to left.
• C) shift the short-run aggregate supply curve to the right.
• D) shift the short-run aggregate supply curve to the left.

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Definitions:

MC < ATC

A condition where the marginal cost of producing an additional unit is less than the average total cost, implying the company can lower its average total cost by increasing production.

Perfectly Competitive

A perfectly competitive market is characterized by many buyers and sellers, homogenous products, and free entry and exit, leading to price determination by market forces.

Marginal Cost Curve

A graphical representation that shows how the cost of producing one more unit of a good changes as the quantity produced increases.

Short-run Supply Curve

A graphical depiction that showcases how much of a product suppliers are willing and able to sell at different prices in the short run, with at least one input fixed.