Economics 9708 · AS & A Level · Long-run costs and economies of scale

Long-run costs and economies of scale — practice question

The diagram shows the labour market. What effect would a shift in the supply curve from S1 to S2 have on transfer earnings and economic rent?

  • Atransfer earnings: fall; economic rent: falls
  • Btransfer earnings: fall; economic rent: rises
  • Ctransfer earnings: rise; economic rent: rises
  • Dtransfer earnings: rise; economic rent: falls

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