If a firm wage costs increase this will cause __________ and __________?
Correct answer: A. marginal cost to increase, output to fall
- A. marginal cost to increase, output to fall
- B. marginal revenue to increase output to fall
- C. opportunity cost to increase the firm will close
- D. average cost will rise output will increase ____ output and an upward shift in marginal revenue ____ output
Explanation
Higher wage costs raise the firm's variable and marginal costs, making each additional unit less profitable at the former output. The profit-maximising response is normally to reduce output.
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Individual consumers, firms and markets are examined through demand and supply, elasticity, consumer choice, production, costs, revenue and the determination of prices and output. The topic also covers market structures such as perfect competition, monopoly and oligopoly, plus market failure, externalities and the distinction between microeconomic decisions and economy-wide outcomes.
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