Question

The average wage of workers increases in a purely competitive industry. This change will result in (I) increase in marginal cost for the firms in the industry (II) increase in average variable cost for firms in the industry (III) increase in average fixed cost for firms in the industry (IV) increase in the industry supply curve

Answer 1

The correct option is (I) increase in marginal cost for the firms in the industry

Step-by-step explanation:

According to the given scenario, when there is a rise in increase in the workers wages in a purely competitive industry so the production cost would also rise that results in an increment in the marginal cost also the maximize profit arises when the marginal cost is equivalent to the marginal revenue

Therefore as per the given scenario, the correct option is (I)