An Increase in the Wage Rate Will Have a Greater

Multiple Choice

An increase in the wage rate will have a greater effect on average costs

A) The larger the proportion labour costs are of total costs and the easier it is to substitute capital for labour.
B) The larger the proportion labour costs are of total costs and the harder it is to substitute capital for labour.
C) The greater is the diminishing marginal product of labour.
D) The greater are returns to scale.