Which of the following statements is correct?

Question

Improvements in technology decrease worker productivity, holding other variables constant.

Improvements in technology result in higher marginal and average costs for each quantity produced.

Increases in input prices, such as wages or energy costs, have the effect of shifting costs curves upward.

Costs are lower at every level of output.

Answer 1

The correct statement among the options provided is:

"Increases in input prices, such as wages or energy costs, have the effect of shifting costs curves upward."

This statement is accurate because when the prices of inputs increase, it becomes more expensive to produce goods or services, which causes cost curves (such as the average cost and marginal cost curves) to shift upward.

The other statements are not correct:

1. Improvements in technology typically increase worker productivity, not decrease it.
2. Improvements in technology usually lead to lower marginal and average costs, as they often make production more efficient.
3. The statement "Costs are lower at every level of output" is generally not applicable, especially in the context of increased input costs.