If a technological advance increases a firm's labor productivity, we would expect its
A)average total cost curve to rise.
B)average total cost curve to fall.
C)total cost curve to rise.
D)average total cost curve to be unaffected.

Question

Quizplus · Accepted Answer

When a technological advance increases a firm's labor productivity, it means the firm can produce more output with the same amount of labor or the same output with less labor. This efficiency gain typically leads to lower production costs per unit of output, which is reflected in a falling average total cost curve.

If a Technological Advance Increases a Firm's Labor Productivity, We