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.

Answer: B

Economics

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The production function shows

A) the incremental output gained by improving the production process. B) the maximum output that can be produced from each possible quantity of inputs. C) the technology used to produce output. D) the total cost of producing a given quantity of output.

Economics

Refer to Table 10-2. Holding prices constant, when Keira's income changed from $18 to $23, what happens to her total utility and to the marginal utilities of the last cup of soup and the last sandwich purchased?

A) Her total utility and the marginal utility of the last sandwich consumed increase but marginal utility of the last cup of soup consumed decreases. B) Her total utility and the marginal utility of the last cup of soup consumed increase but marginal utility of the last sandwich consumed decreases. C) Her total utility decreases but the marginal utilities of the last cup of soup and the last sandwich consumed increase. D) Her total utility, the marginal utility of the last cup of soup consumed, and the marginal utility of the last sandwich consumed all increase. E) Her total utility increases but the marginal utilities of the last cup of soup and the last sandwich consumed decrease.

Economics