NECO Economics 2023 Objective — Question 19

Question 19 of 50 from the National Examinations Council (NECO) Economics 2023 Objective paper, with the correct answer and a full explanation.

If a firm retrenches some of its factory workers, its A. fixed cost is likely to increase B. Marginal cost may increase C. average fixed cost may increase D. Variable cost will decline

A. fixed cost is likely to increase
B. Marginal cost may increase
C. average fixed cost may increase
D. Variable cost will declineCorrect

Explanation

Wages paid to workers are a variable cost; retrenching workers (reducing labour used) will reduce this variable cost, which changes with the level of output/employment.

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