-(appendix)If the two isoquants represent profit maximizing levels of output for two different wage rates,the output effect of a decrease in the wage rate is represented by the move from:
A)A to B
B)B to C
C)A to C
D)C to A

Question

-(appendix)If the two isoquants represent profit maximizing levels of output for two different wage rates,the output effect of a decrease in the wage rate is represented by the move from:
A)A to B 
B)B to C 
C)A to C 
D)C to A

Quizplus · Accepted Answer

A decrease in the wage rate reduces the cost of labor, making it cheaper for firms to produce. This typically leads to an increase in the quantity of output produced as firms take advantage of the lower input costs to produce more. The move from B to C represents an increase in the level of output, consistent with the output effect of a decrease in the wage rate.

-(Appendix)If the Two Isoquants Represent Profit Maximizing Levels of Output