Suppose the price of the product that labor is producing increases and simultaneously the price of capital, which is substitutable for labor, decreases. Assuming that the substitution effect is greater than the output effect, the demand for labor:
A. will increase.
B. will decrease.
C. may either increase or decrease.
D. will not change.
Answer: B
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If the central bank targets a monetary aggregate, it is likely to lose control over the interest rate because
A) of fluctuations in the demand for reserves. B) of fluctuations in the consumption function. C) bond values will tend to remain stable. D) of fluctuations in the business cycle.
Generally speaking, firms _____ of their capital assets
a. prefer straight-line depreciation b. prefer accelerated depreciation c. are indifferent between straight-line and accelerated depreciation d. prefer not to depreciate
Consider two people, Sandy Roos, who earns $25,000 . and Gary Behrman, who earns $50,000 . If the current flat-tax rate is 20 percent, then
a. Gary would prefer a poll tax to a flat tax b. Sandy would prefer a poll tax to a flat tax c. Gary and Sandy both pay the same amount of tax d. Sandy would prefer the flat tax to a progressive income tax e. Gary would prefer a progressive income tax to the flat tax
Which of the following BEST describes the concept of serendipity in exporting?
A) modifying products to meet cultural preferences B) initiating global sales through e-commerce methods C) relying too much on exports when domestic sales suddenly increase D) opportunistically responding to unsolicited orders from foreign customers