Comment on the following statement: "A firm's demand for labor can be affected by the availability of other inputs."
What will be an ideal response?
The statement is true. If two inputs are complements, the presence of one will increase the productivity of the other. For example, if capital and labor are complements, the presence of capital will increase the demand for labor. However, it is possible for two inputs to be substitutes for one another. In that case, the presence of one will lead to a drop in the demand for the other.
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The law of diminishing product states that if increasing quantities of a variable factor are applied to a given quantity of fixed factors, then:
a) the MP and the AP of the variable factor will eventually decrease. b) TP will eventually begin to fall. c) the AP will eventually decrease, but only if TP is held constant. d) the MP will eventually decrease with constant AP. e) the AP will eventually decrease with constant MP.
_____ illustrates the speculative temper of the 1920s
a. The Ponzi scheme b. The New York pyramid scandal c. The Florida Land Boom d. Both a and b are correct. e. Both a and c are correct.