Assume the price of capital falls relative to the price of labor and, as a result, the demand for labor increases. Therefore:
A. capital is very highly substitutable for labor.
B. the output effect is greater than the substitution effect.
C. the income effect is greater than the output effect.
D. the substitution effect is greater than the output effect.
Answer: B
Economics
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Refer to Scenario 3. Diminishing marginal returns are incurred when output is increased from:
A) 1 to 2 units of output. B) 2 to 3 units of output. C) 3 to 4 units of output. D) 4 to 5 units of output.
Economics
Which of the following, other things the same, would make the price level decrease and real GDP increase?
a. long-run aggregate supply shifts right b. long-run aggregate supply shifts left c. aggregate demand shifts right d. aggregate demand shifts left
Economics