Which of the following is an advantage to a firm with increasing productivity?
A) Machine breakdowns will be less likely.
B) Raw materials will decline in price.
C) The firm can afford to pay workers higher wages without raising prices.
D) Workers will not want to unionize.
E) The standard of living of its employees will fall.

Question

Quizplus · Accepted Answer

With increasing productivity, a firm can produce more output with the same amount of inputs. This means that the cost per unit of production decreases, allowing the firm to potentially afford to pay workers higher wages without raising prices.

Option A is incorrect because machine breakdowns are not directly related to productivity. Having more production output does not necessarily mean that machines are less likely to break down.

Option B is incorrect because raw materials may or may not decline in price, regardless of changes in productivity.

Option D is incorrect because unionization is not directly related to productivity.

Option E is incorrect because increasing productivity should not decrease the standard of living of employees. In fact, if the firm is able to pay higher wages, employees may experience an increase in their standard of living.

Which of the Following Is an Advantage to a Firm