Because the Productivity of Labor Decreases as the Quantity of Labor

question 216

Multiple Choice

Because the productivity of labor decreases as the quantity of labor employed increases,

• A) the aggregate production function shifts upward as the real wage rate decreases.
• B) the quantity of labor a firm demands increases as the real wage rate decreases.
• C) the labor demand curve shifts right as the real wage rate decreases.
• D) the quantity of labor a firm demands increases as the money wage rate decreases.

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Definitions:

Constant Growth Rate

The steady rate at which a company’s dividends are expected to grow, often used in valuing stocks with the Gordon Growth Model.

Expected Value

The weighted average of all possible values for a given set of probabilities, used in statistics and financial decision making.

Firm's Stock

The shares of ownership in a corporation that represent a claim on the company's earnings and assets.

Dividend Yield

A financial ratio that shows how much a company pays out in dividends each year relative to its stock price, often used by investors to gauge the income-generating ability of a stock.