An increase in the wage rate will have a greater effect on average costs:
a. the larger the proportion labor costs are of total costs and the easier it is to substitute capital for labor.
b. the larger the proportion labor costs are of total costs and the harder it is to substitute capital for labor.
c. the greater is the diminishing marginal product of labor.
d. the greater are returns to scale.
b
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As capital deepening occurs, there will be increased real wages and economic growth
Indicate whether the statement is true or false
As one moves down a straight-line demand curve, the elasticity increases.
Answer the following statement true (T) or false (F)
The demand for unionized labor will generally be more elastic, and it will be more difficult for the union to achieve above-equilibrium wages when
a. there are many close substitutes for the unionized workers. b. trade barriers limit the importation of the product produced by the unionized workers. c. the cost of employing the unionized workers is a small part of the total cost of product that they produce. d. the demand for the product produced by the unionized workers is highly inelastic.
In a competitive market, the actions of any single buyer or seller will
a. have a negligible impact on the market price. b. have little effect on market equilibrium quantity but will affect market equilibrium price. c. affect marginal revenue and average revenue but not price. d. adversely affect the profitability of more than one firm in the market.