In labor markets, the substitution effect occurs when
A. a change in the price of a substitute input reduces the cost of capital.
B. a substitute good also functions as a complement.
C. the cost of production falls enough that the firm will produce a larger amount of output.
D. a change in the price of a substitute input causes the demand for labor to change in the same direction.
Answer: D
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In the figure above, governments
A) collect taxes. B) coordinate economic activities of households and firms. C) hire factors of production. D) own factors of production. E) sell goods and services to household.
If real GDP is $800 million and aggregate labor hours are 20 million, labor productivity is ________
A) $40 per hour B) $16,000 million C) $40 million D) $160 per hour
In which of the following cartels is total cartel profit likely to be the highest?
A) a cartel made up of firms of various sizes each producing the same quantity of a differentiated product B) a cartel made up of identical firms each producing the same quantity of a homogeneous product C) a cartel made up of equal sized firms each producing different quantities of a differentiated product D) a cartel made up of firms of various sizes each producing different quantities of a homogeneous product
If the MPC = 0.75, then the spending multiplier must be:
A. 5 B. 4 C. 3 D. 1.25