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 downward.
B. The firm’s marginal cost curve will shift downward.
C. To produce an unchanged output, the firm would use more labor
D. All of the above
Answer:D
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 downward. B. The firm’s marginal cost curve will shift downward. C. To produce an unchanged output, the firm would use more labor D. All of the above