If a firm retrenches some of its factory workers its
A.
average fixed cost may increase
B.
variable cost will decline
C.
marginal cost may increase
D.
fixed cost is likely to increase
Correct Answer: Option B
Explanation
If a firm retrenches some of its factory workers, its variable cost will decline. This is because variable costs are costs that vary with the level of output. When the number of workers is reduced, the amount of variable costs will also be reduced.
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