A Major Computer Software Company Maintains a Technical Support Center

question 120

Multiple Choice

A major computer software company maintains a technical support center in a rural area and is the only employer in this region. Suppose the firm develops a new software system for managing technical support calls, and the marginal product of labor increases. What happens to the equilibrium outcome in this labor market?

• A) Labor demand shifts rightward, equilibrium wage and employment levels decline.
• B) Labor demand shifts rightward, equilibrium wage and employment levels increase.
• C) Labor demand curve remains the same, equilibrium wage and employment levels increase.
• D) Labor demand curve remains the same, equilibrium wage and employment do not change.
• E) none of the above

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Definitions:

Freedom To Farm Act

A law passed in 1996 that revamped 60 years of U.S. farm policy by ending price supports and acreage allotments for wheat, corn, barley, oats, sorghum, rye, cotton, and rice.

Subsidies

Financial assistance provided by the government to businesses or individuals, often to support industries or activities considered beneficial.

Federal Government

The central government of a country, which holds the primary authority over its subdivisions and is responsible for national policies.

Crop Insurance Programs

Government or private sector initiatives designed to protect farmers against losses due to natural disasters, pests, or drops in market prices.