Firms have an incentive to substitute capital for labor as the
A. price of labor decreases.
B. price of capital increases.
C. marginal product of labor increases.
D. price of labor increases.
Answer: D
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What is the fastest growing component of consumption in the United States?
A) new home construction B) services C) nondurable goods D) durable goods
Which of the following statements is CORRECT?
A) A firm does not need to take into account its sunk cost when making current decisions. B) Long-run decisions are easily reversed. C) Short-run decisions are not easily reversed. D) In the long run, a firm can change its plant but not the quantity of its labor.
Moral hazard occurs when an agreement encourages undesirable behavior
Indicate whether the statement is true or false
In the long-run, what happens to the aggregate price level when the Federal Reserve decreases the money supply?
a) The aggregate price level falls. b) The aggregate price level rises. c) The aggregate price level rises and then falls. d) The aggregate price level does not change.