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

Question

Quizplus · Accepted Answer

If wage increases are less than productivity increases, it means that the amount of output per worker has increased and the cost of producing each unit of output has decreased. This results in a fall in unit wage costs. None of the other options would lead to a fall in unit wage costs.

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