Assume that labor is a variable input. The average wage of workers increases in

Question

Assume that labor is a variable input. The average wage of workers increases in a purely competitive industry. This change will result in a(n) Multiple Choice increase in marginal cost for firms in the industry and an increase in the industry supply curve decrease in marginal cost for firms in the industry and a decrease in the industry supply curve decrease in marginal cost for firms in the industry and an increase in the industry supply curve increase in marginal cost for firms in the industry and a decrease in the industry supply curve

Explanation / Answer

Answer:- assume that labor is a variable input. the average wage of workers increases in a purely competitive industry. This change will result in

Correct Answer:- increase in marginal cost for firms in the industry and a decrease in the industry supply curve

Reason:- When there will be an increase in the labor wages, the cost of production will increase causing the marginal cost to increase and thus the production will be lowered resulting in decrease in supply curve

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