What are the effects on marginal cost and output when a firm's wage expenses rise?

Multiple choice question for Supply and Demand. Select an option, then review the explanation below.

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marginal cost rises, and production decreasesmarginal revenue rises, and production decreasesopportunity cost rises, leading the firm to shut downaverage cost increases, and output rises with a shift upward in marginal revenue

Explanation

An increase in wage costs leads to higher marginal costs, which typically causes the firm to reduce its output. The other options either incorrectly link marginal revenue changes or misstate the firm's response to cost increases.

Practice related questions from the same subject.

1.What is the typical shape of a demand curve?
2.What term describes a company earning profits beyond its normal profit level?
3.How does an increase in marginal cost affect output, and how does an increase in marginal revenue impact output?
4.Marginal revenue refers to the ________ resulting from producing an additional ________ of output.
5.What are firms generally assumed to do with their costs and profits?

What are the effects on marginal cost and output when a firm's wage expenses rise?

Explanation

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