Which factor can lead to a decrease in production costs?

A decrease in production costs is often essential for businesses aiming to enhance profitability or remain competitive. Lower wages for labor directly reduces one of the most significant expenses for many employers. When companies spend less on wages, their overall production costs decrease, which can allow them to either increase profit margins or lower prices for consumers, making their products more competitive in the market.

The other factors listed generally contribute to higher production costs rather than reducing them. Increased government regulations often require businesses to invest in compliance measures, which can be costly. Increased indirect taxes typically raise the cost of goods, thereby increasing production costs. Higher utility costs also add to the expense of running operations, putting additional financial pressure on businesses. Therefore, a decrease in labor costs, represented by lower wages, is the most effective way to reduce overall production costs.