A 20 percent increase in the wage rate induces firms in an industry to reduce quantity demanded for labor by 5 percent in the first year. Five years later we would expect, other things constant,
A) the reduction in the quantity demanded of labor to be much greater than 5 percent.
B) the reduction in the quantity demanded of labor to be less than 5 percent.
C) the reduction in the quantity demanded of labor to be about 5 percent.
D) the quantity demanded of labor to be back to its original level.
A
Economics
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In the Ricardian model, wages are equal across industries because:
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An externality can be a
A) cost or a benefit. B) benefit but not a cost. C) cost but not a benefit. D) marginal cost but not a total cost.
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