An industry utilizes capital and two types of labor. Unskilled labor is a substitute for capital while the skilled labor is complementary to capital. An increase in the price of capital will
A) cause the demand for labor to increase, raising wages of both skilled and unskilled labor.
B) cause the wage of unskilled labor to rise relative to the price of skilled labor.
C) induce the firms in the industry to cut back on all levels—capital, unskilled and skilled labor.
D) cause the demand for skilled labor to rise and the demand for unskilled labor to fall.
B
You might also like to view...
The AS curve shifts leftward if
A) good weather increases agricultural harvests. B) OPEC reduces world oil prices. C) tax cuts stimulate labor supply. D) the money wage rate increases. E) government expenditure increases.
According to economic liberalism, the regulating force of the economy is
a. self-interest. b. laissez-faire. c. competition. d. the government.
Marketable government securities consists of Treasury bills,
A) Treasury notes, and U.S. savings bonds. B) Treasury notes, and Treasury bonds. C) Treasury bonds, and federal funds. D) U.S. saving bonds, and federal funds.
Negotiations between the management of a company and the management of a union for the purpose of setting a mutually agreeable contract on wages, fringe benefits and working conditions for all employees in a union is know as
A) a closed shop. B) a union shop. C) collective bargaining. D) an industrial union.