If the wage rate rises, then in the long run, the firm will replace some of its labor with other factors such as capital, even if it keeps its output level constant. This phenomenon is known as
a. the substitution effect.
b. the scale effect.
c. the regressive-factor effect.
d. the factor-price effect.
a. the substitution effect.
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Quality of life indexes produced in popular magazines often place a heavy emphasis on the cost of housing in different cities -- with a lower housing cost entering the index as a positive feature of the city. Why might such quality of life indeces be misleading?
What will be an ideal response?
Betty and Ann live on a desert island. With a day's labor, Ann can produce 8 fish or 4 coconuts; Betty can produce 6 fish or 2 coconuts
Ann's opportunity cost of producing 1 coconut is ________ and she should specialize in the production of ________. A) 8 fish per coconut; fish B) 2 fish per coconut; coconuts C) 6 fish per coconut; coconuts D) 0 fish per coconut; coconuts
Which of the following would NOT be considered a consumption good?
A) a new sweater B) tools used to cut metal on an auto production line C) a jar of Skippy peanut butter D) a bottle of Scotch whiskey
Changes in the value of the euro affect the economies of
A. No countries as long as exchange rates are flexible. B. Only those countries using the euro as currency. C. Potentially the entire world. D. All European countries, but there would be no significant impact on countries outside Europe.