Suppose That Due to a Severe Drought in Texas, 100,000

question 258

Multiple Choice

Suppose that due to a severe drought in Texas, 100,000 farmers relocate from Texas to Louisiana. Assuming that land and labor are complements in a farming production function, what would happen to the wages earned by workers and the rents earned by landowners in Louisiana?

• A)Both wages and rents would increase.
• B)Both wages and rents would decrease.
• C)Wages would increase, and rents would decrease.
• D)Wages would decrease, and rents would increase.

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Definitions:

Indirect Labor

Labor costs not directly associated with the production of goods, such as maintenance and cleaning staff salaries.

Assembly Line Supervisor

An individual responsible for overseeing and managing the workflow and workers on a manufacturing assembly line.

Direct Labor

The compensation provided to workers directly engaged in manufacturing products or delivering services.

Period Cost

Expenses that are incurred during a specific accounting period but not directly tied to the production process, such as selling, general, and administrative expenses.