Which of the following best describes the output effect of a wage increase?
A)The firm's marginal cost increases,the firm desires to produce less output,and therefore less labor is required
B)The cost of labor is relatively higher,causing the firm to use relatively less labor
C)The firm's marginal cost falls,the firm desires to produce more output,and therefore more labor is required
D)The firm's labor demand curve becomes more inelastic,causing it to employ less labor

Question

Quizplus · Accepted Answer

When a wage increase occurs, the firm's cost of producing an additional unit of output (marginal cost) increases. As a result, the firm may desire to produce less output because it becomes more expensive to produce each additional unit. Consequently, less labor is required to produce the reduced amount of output.

Which of the Following Best Describes the Output Effect of a Wage