A manufacturing firm operates in an economic model where labor is the sole input cost. The firm simultaneously increases the nominal wage paid to its workers by 8% and also sees an 8% increase in its labor productivity due to new technology. What is the resulting impact on the firm's average cost per unit of output?
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A firm operates under a model where labor is the only production cost and the output per worker is constant. If this firm increases the nominal wage it pays to its workers by 10%, while labor productivity remains exactly the same, what is the resulting effect on the firm's average cost per unit?
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