Assume the Prices of Labor and Capital Remain the Same

question 93

Multiple Choice

Assume the prices of labor and capital remain the same, but the average educational level of workers decreases and therefore labor productivity decreases. This would lead a firm to

• A) use a more capital-intensive production technology.
• B) use a more labor-intensive technology.
• C) not change its production technology, but produce fewer units of output.
• D) use only capital to produce the product.

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