If the wages a firm pays it workers increase then
A) the firm's long- run average cost curve does not shift and there is no movement along the long- run average cost curve.
B) the firm moves rightward along its long- run average cost curve but not necessarily to where it has diseconomies of scale.
C) the firm moves rightward along its long- run average cost curve to where it has diseconomies of scale.
D) the firm's long- run average cost curve shifts upward.

Question

Quizplus · Accepted Answer

An increase in wages raises the firm's production costs. In the long run, all costs are variable, so an increase in wages would shift the long-run average cost curve upward, reflecting higher costs at every level of output.

If the Wages a Firm Pays It Workers Increase Then