A Firm Is Currently Producing an Output at Which Price

question 276

Multiple Choice

A firm is currently producing an output at which price equals the minimum point on the average variable cost curve. If wage rates increase, the firm will

• A) increase its rate of output to make up for the higher variable costs.
• B) shut down since it would no longer be covering its variable costs.
• C) decrease its rate of output to offset the higher variable costs.
• D) not make any changes since its current rate of output is still minimizing its losses.

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