Final answer:
The student's question concerns understanding the impact of wage rate changes on labor costs and the incentive for firms to invest in machinery, resulting in a trade-off between paying for more hours of labor against machine use and overall labor productivity.
Step-by-step explanation:
The question relates to the concept of cost behavior, particularly concerning labor and overhead costs in a business setting. When widget workers are paid $10 per hour, determining the cost of labor is straightforward: one multiplies the number of hours worked by the hourly wage rate. As the wage rate increases to $24 per hour, the company may decide to alter its production plan by investing in more machinery, leading to higher productivity per labor hour but potentially resulting in a need for fewer workers. This scenario illustrates how changes in wage rates can influence a firm's labor costs and capital investment decisions, reflecting the interplay between labor and physical capital in the production process.