The short-run average variable cost of a firm will rise owing to

Answer Details

The short-run average variable cost of a firm will rise owing to an increase in the cost of labor. This is because in the short run, some costs are fixed and cannot be changed, while others are variable and can change with changes in production levels. Labor costs are typically a variable cost, meaning that as the firm increases its production, it will also need to hire more workers, leading to an increase in its labor costs. An increase in labor costs will cause the firm's short-run average variable cost to rise, as the average cost per unit of output will increase. The short-run average variable cost is calculated by dividing the firm's total variable costs by the quantity of output produced. So, as the cost of labor increases, the firm's total variable costs will also increase, leading to a rise in its short-run average variable cost. In summary, the short-run average variable cost of a firm will rise due to an increase in the cost of labor in a simple and comprehensive way.