All else constant,an increase in the price of labor would cause the total amount of output that can be produced with a fixed amount of spending to ________.This would result in a movement to a ________ isoquant.
A)increase; lower
B)increase; higher
C)decrease; lower
D)decrease; higher

Question

Quizplus · Accepted Answer

An increase in the price of labor would increase the cost of production, which would lead to a decrease in the total amount of output that can be produced with a fixed amount of spending. This would result in a movement to a lower isoquant as the firm can no longer afford to produce at the same level as before.

All Else Constant,an Increase in the Price of Labor Would