Assume That Labor and Capital Are Complements in Production and That

question 58

Multiple Choice

Assume that labor and capital are complements in production and that the wage declines. Which of the following statements best describes the adjustment in the use of labor?

• A) Adjustments in labor use are not influenced by adjustments in capital use.
• B) The MRP_L curve shifts downward in this case.
• C) More labor is used both because of the reduced wage and increased use of capital.
• D) Changes in labor use are indeterminate because the reduced wage and reduced use of capital have opposite influences on the use of labor.

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