Wage rate increase
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Indicate whether each of the following involves an upward or downward shift in the long-run average cost curve or, instead, involves a leftward or rightward movement along a given curve. Also indicate whether each will have an increasing, decreasing, or uncertain effect on the level of average cost.
1. A rise in wage rates.
2. A decline in output.
3. An energy-saving technical change.
4. A fall in interest rates.
5. An increase in learning or experience.
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Solution Summary
This solutions examines wage rate increases, decline in output, energy-saving technical change, interest rate declines, and an increase in learning or experience. It is 200 words.
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1. The wage rate increase will increase the cost of production for the same number of units hence it will cause an upward shift in the LRAC curve and increase LRAC.
2. It will not change the relationship between the costs and quantity but will lead to a ...
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