Assume that labor and capital are substitutes in production. If there is an increase in the price of capital, how can this lead to either an increase or decrease in the demand for labor?
What will be an ideal response?
The answer depends on the relative magnitudes of the substitution and output effects. With the substitution effect, an increase in the price of capital will cause more labor to be used in place of capital. With the output effect, an increase in the price of capital will cause production cost to increase, output to decrease, and for less labor and capital to be used. If the substitution effect is greater than the output effect, the demand for labor will increase. If the substitution effect is less than the output effect, the demand for labor will decrease.
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A) 1/2 B) -2 C) -1/2 D) 2
One of the merits of plurality voting is:
A. its simplicity. B. it has all four criteria for an ideal voting system. C. it guarantees the best option will win. D. it produces a result that most participants are happy with.
We have run trade deficits every year since ________.
Fill in the blank(s) with the appropriate word(s).
A new country has been established on the moon and created a currency called cheesybits. Which of the following does not involve a foreign exchange transaction?
A. Luna lives on the moon and wants to travel to visit relatives in Japan. B. Moonrock corporation needs new mining equipment that it buys from a manufacturer in Russia. C. Moonbeam Incorporated, the largest company on the moon, sells building products for houses on the moon. D. Han is visiting the moon and wants to eat at his favorite restaurant, the Moonglow Bar and Grill.