For a firm in the long-run, an increase in the market wage rate will cause it to reduce the employment of labor. With fewer workers, the firm's marginal revenue product for capital

a. shifts downward leading the firm to use less capital.
b. shifts upward leading the firm to use more capital.
c. twists so that is becomes more elastic
d. is not affected.


a. shifts downward leading the firm to use less capital.

Economics

You might also like to view...

The motivating force behind an increase in supply in a long-run adjustment to equilibrium is

a. lower prices. b. economic profits that are present in the short run. c. higher profit expectations among owners of firms in the industry, triggered by increased prices. d. normal profits witnessed by individuals outside the industry that trigger entry. e. the decreases in average cost that can be obtained through economies of scale.

Economics

In a random effects model, we assume that the unobserved effect is correlated with each explanatory variable.

Answer the following statement true (T) or false (F)

Economics

 In the above table, the average product of the 6th worker is

A. 4. B. 0. C. 3. D. 5.

Economics

Answer the following questions true (T) or false (F)

1. Eliminating structural unemployment would be good for the economy. 2. The full-employment rate of unemployment is zero. 3. The unemployment rate in the United States is typically lower than in Western Europe because the United States has tougher requirements for the unemployed to receive government payments.

Economics