Other things being equal, unit wage costs will tend to increase if
A)there is a rise in the price of oil.
B)wage and price controls are in effect.
C)wage increases exceed productivity increases.
D)the government reduces payroll taxes.
E)wages rise.

Question

Quizplus · Accepted Answer

If wages increase without a corresponding increase in productivity, it means that workers are getting paid more for the same amount of output, which would increase unit wage costs. The other choices may have an impact on the overall cost structure of a firm, but they do not directly relate to unit wage costs.

Other Things Being Equal, Unit Wage Costs Will Tend to Increase