Graphically,all Else Constant,a Decrease in the Price of Labor Would

question 5

Multiple Choice

Graphically,all else constant,a decrease in the price of labor would be illustrated by:

• A)a parallel shift of the isocost line in toward the origin.
• B)rotating the isocost line away from the origin along the labor axis.
• C)a parallel shift of the isocost line away from the origin.
• D)rotating the isocost line in toward the origin along the capital axis.

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Definitions:

Comparative Advantage

The ability of a country or individual to produce a particular good or service at a lower opportunity cost than others.

Production Possibilities

The different mixes of products and services that a country can generate considering its accessible resources and current technology.

Total Output

The complete quantity of goods or services produced by a firm, industry, or economy within a specified period.

World-Market Price

The internationally agreed-upon price of a commodity, product, or service, influenced by global supply and demand.