Suppose a firm is using two inputs,labor,and capital.What will happen if the price of labor falls?
A)The firm's average cost curve will shift upward.
B)The firm's marginal cost curve will shift downward.
C)To produce the same level of output,the firm would need more capital.
D)The firm's total cost of production will increase.

Question

Quizplus · Accepted Answer

When the price of labor falls, the cost of producing each additional unit of output (marginal cost) decreases, leading to a downward shift in the firm's marginal cost curve.

Suppose a Firm Is Using Two Inputs,labor,and Capital