Which curves are affected when the price of labor changes?A.ATC and AVCB.ATC and AFCC.ATC, AFC, MC, and AVCD.ATC, AVC, and MCE.ATC, AFC, and AVC
Question
Which curves are affected when the price of labor changes?A.ATC and AVCB.ATC and AFCC.ATC, AFC, MC, and AVCD.ATC, AVC, and MCE.ATC, AFC, and AVC
Solution
When the price of labor changes, it directly affects the cost of production. This in turn affects the following curves:
A. Average Total Cost (ATC): This is the total cost per unit of output. It includes both fixed and variable costs. If the price of labor increases, the ATC will also increase because labor is a part of the total cost.
B. Average Variable Cost (AVC): This is the variable cost per unit of output. Labor is a variable cost, so if the price of labor increases, the AVC will also increase.
D. Marginal Cost (MC): This is the cost of producing one more unit of output. If the price of labor increases, the MC will also increase because labor is a part of the cost of producing additional units.
Therefore, the correct answer is D. ATC, AVC, and MC.
Similar Questions
What happens when the price of labor decreases?A.The AVC curve shifts downward, and the MC curve shifts upward.B.The AFC curve shifts downward.C.The ATC curve shifts upward.D.Both the AFC and AVC curves shift downward.E.The AVC curve shifts downward.
Which curves are affected when the price of capital changes?A.ATC and AFCB.ATC, AFC, and MCC.ATC, AFC, MC, and AVCD.ATC, AFC, and AVCE.ATC and AVC
The functioning of the labor market primarily affects the shape of theGroup of answer choicesaggregate demand curve.money demand curve.aggregate supply curve.planned investment curve.
Given the table below: Explain the derivation and shape of each of these four curves and their relationships to one another. Specifically, explain in non-technical terms why the MC curve intersects both the AVC and ATC curves at their minimum points. Explain how the location of each curve graphed in question 3(b) would be altered if (1) total fixed cost had been $100 rather than $60 and (2) total variable cost had been $10 less at each level of output. TotalProduct TotalFixedCost ($) TotalVariableCost ($) TotalCost ($) Average FixedCost ($) Average Variable Cost ($) Average TotalCost ($) Marginal Cost ($)0 60 0 60 1 60 45 105 60.00 45.00 105.00 452 60 85 145 30.00 42.50 72.50 403 60 120 180 20.00 40.00 60.00 354 60 150 210 15.00 37.50 52.50 305 60 185 245 12.00 37.00 49.00 356 60 225 285 10.00 37.50 47.50 407 60 270 330 8.57 38.57 47.14 458 60 325 385 7.50 40.62 48.12 559 60 390 450 6.67 43.33 50.00 6510 60 465 525 6.00 46.50 52.50 75Shown are the related cost curves: Identify which curve refers to:Variable Curve Variable CurveTotal costs Average total costs Variable costs Average variable costs Fixed costs Average fixed costs Marginal costs
The aggregate supply curve will shift up when which of the following occurs?Question 20Select one:a.an increase in the expected price levelb.a decrease in unemployment benefitsc.a decrease in firm's markup over labour costsd.All of the above.e.None of the above.
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