Answered: If labor costs are 60 percent of…

If labor costs are 60 percent of production costs, then a 15 percent increase in wage rates would increase production costs by: A. 60 percent B. 45 percent C. 15 percent D. 9 percent

Microeconomics: Principles & Policy

14th Edition

ISBN:9781337794992

Author:William J. Baumol, Alan S. Blinder, John L. Solow

Publisher:William J. Baumol, Alan S. Blinder, John L. Solow

Chapter7: Production, Inputs, And Cost: Building Blocks For Supply Analysis

Section: Chapter Questions

Problem 9TY

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Question

If labor costs are 60 percent of production costs, then a 15 percent increase in wage rates would increase production costs by:
A. 60 percent
B. 45 percent
C. 15 percent
D. 9 percent

Expert Solution

Step 1

Production cost refers to the money expenses incurred on various inputs such as raw material, inventory, labor and other factors of productions for the production of goods and services.

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