If a large decrease in the cost of capital leads to a firm increasing the labor it uses
A. then the output effect outweighs the substitution effect.
B. the substitution effect outweighs the output effect.
C. the substitution and output effects are equal.
D. there is no way to determine the relative strengths of the output and substitution effects.
A. then the output effect outweighs the substitution effect.
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When a unit tax is placed on demanders ____
a. it will be paid entirely by demanders if the demand curve is elastic b. it will have the same effect as a similar unit tax placed on suppliers c. they will pay a larger share than if it was initially placed on suppliers d. they will pay a smaller share than if it was initially placed on suppliers
As a fishing firm hires its first, second, and third workers, it could find that marginal product actually rises. The reason for this is:
a. diminishing returns have set in. b. the division of labor creates greater productivity. c. the firm has hired another boat. d. all tasks are shared by all workers. e. less qualified workers are becoming available.
The Stolper-Samuelson theorem indicates that, after a country shifts to free trade
A. the real return to the factor used intensively in the import-competing industry will rise in the long run. B. the real return to the factor used intensively in the export industry will rise in the long run. C. the real return to all the resources in an economy will increase. D. the real return to the factor used intensively in the export industry will fluctuate around a long-run trend.
When two goods are substitutes for each other, the cross price elasticity of demand
A. may be either positive or negative. B. will be zero. C. will be positive. D. will be negative.