Lower labour costs reduce production costs, leading to an increase in supply, which typically lowers the equilibrium price.

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Lower Labour Costs

Question 193

Multiple Choice

Lower labour costs

A) increase the supply of Tim's baked goods and lower the equilibrium price.
B) increase the supply of Tim's baked goods, increase the demand for Tim's baked goods and increase the equilibrium quantity.
C) lower the equilibrium price of Tim's baked goods but do not change the equilibrium quantity.
D) increase the demand for Tim's baked goods and raise the price.
E) increase the quantity supplied of Tim's baked goods.

Correct Answer: