Lance runs a bicycle repair shop. His assistant demanded and received a wage raise. In response, Lance's supply of repair services decreases because

Question

Quizplus · Accepted Answer

When Lance's assistant demanded and received a wage raise, the cost of inputs, i.e., the wages paid to the assistant, has increased. This increase in cost causes the supply of repair services to decrease as the marginal cost of producing each unit of repair service has increased. Therefore, the correct choice is A, i.e., the price of an input rises.

Lance Runs a Bicycle Repair Shop