Final answer:
Overhead charges for equipment include the wages of mechanics and supervisory personnel, the wages paid to the equipment's operator, and the capital cost of the equipment, so the answer is D) all of the above. As wages rise, firms may invest more in machinery over labor, possibly reducing the number of workers needed.
Step-by-step explanation:
Overhead charges for equipment involve various costs associated with the use and maintenance of the equipment. These can include wages for mechanics and supervisory personnel, which are necessary for the upkeep and oversight of the equipment. Additionally, the wages paid to the equipment's operator are a component of overhead, as they are directly related to the operational use of the equipment. The capital cost of the equipment, which encompasses the initial purchase price and any subsequent investments for upgrades or improvements, also contributes to overhead charges. Consequently, the answer to the student's question would be D) all of the above.
The relationship between labor and capital investment is an important consideration for firms, especially when faced with altering wage conditions. When wages rise (such as from $16 to $24 an hour), companies may choose to invest more in machinery, which can increase productivity since machines may be more efficient than labor. This may lead to the use of fewer labor hours, but it can also result in the need for fewer workers overall, as machines can take over some tasks previously performed by humans.