If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use:
A. more labor as a consequence of the substitution effect.
B. more labor as a consequence of the output effect.
C. less labor as a consequence of the substitution effect.
D. less labor as a consequence of the output effect.
Answer: D
You might also like to view...
If real GDP grows at a rate of 6 percent and population grows at a rate of 2 percent, then real GDP per person grows at a rate of
A) -3 percent. B) 8 percent. C) 2 percent. D) 4 percent. E) 0.5 percent.
Which of the following statements is true?
a. Land is a natural-state resource. b. The quantity of land in planet earth can be varied. c. Harvested trees are considered to be land. d. Minerals and metals are not land resources. e. The oceans are not considered to be land.
Xavier is on layoff from his assembly-line job in Detroit, and he expects to return in about four weeks. During this time, he is vacationing in Florida. The Bureau of Labor Statistics would classify Xavier as
a. employed. b. unemployed. c. not part of the labor force. d. a temporary retiree.
The two words economists use most often are
a. inflation and trade. b. supply and demand. c. competition and prices. d. markets and equilibrium.