Answer the following statement(s) true (T) or false (F)
1. When labor and capital are complements in production, a higher wage will cause a firm to use more capital in the long run.
2. When a firm's long-run demand curve for labor is derived, the amount of capital employed is held constant.
3. The substitution effect of a rise in the wage may increase or decrease the firm's employment of labor.
4. Derived demand for an input is the process by which individual firm's demand for labor are aggregated to get the industry demand for labor.
5. The substitution effect on labor always decreases the amount of labor employed when the wage rate goes up.
1. False
2. False
3. False
4. False
5. True
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Cost minimization requires that a firm equate the ratio of marginal products of inputs to the ratio of input prices.
Answer the following statement true (T) or false (F)
A copyright is a source of:
A) legal market power. B) natural market power. C) regulated market power. D) competitive market power.
Select the phrase that correctly completes the following statement. "An increase in input prices caused a decrease in the supply of baseballs. As a result ________."
A) the price of baseballs increased and the quantity demanded of baseballs decreased B) the equilibrium quantity of baseballs increased C) the price of baseballs increased. The higher price caused the supply of baseballs to increase D) the price of baseballs increased and the demand for baseballs decreased
When the policy rate hits its lower bound and inflation keeps falling, this portion of the aggregate demand curve is
A) downward sloping. B) upward sloping. C) flat. D) undetermined.