An increase in the wage rate will have a greater effect on ...

[ereecah]

An increase in the wage rate will have a greater effect on average costs
 a. the larger the proportion labor costs are of total costs and the easier it is to substitute capital for labor.
  b. the larger the proportion labor costs are of total costs and the harder it is to substitute capital for labor.
  c. the greater is the diminishing marginal product of labor.
  d. the greater are returns to scale.

Question 2

For any given output level, a firm's long-run costs
 a. are always greater than or equal to its short-run costs.
  b. are usually greater than or equal to its short-run costs except in the case of diminishing returns to scale.
  c. are always less than or equal to its short-run costs.
  d. are usually less than or equal to its short-run costs except in the case of diminishing returns to scale.

[bdobbins]

Answer to Question 1

b

Answer to Question 2

c