We Would Expect That a Fall in Labor Supply Will

question 21

Multiple Choice

We would expect that a fall in labor supply will have a proportionately larger effect on the market wage rate when

• A) capital goods exist that can replace many of the workers.
• B) the product produced in the industry has several close substitutes.
• C) the product produced in the industry makes up a large portion of most families' budgets.
• D) labor represents a relatively small portion of total costs.

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Definitions:

Price Elasticity of Demand

A determination of demand's sensitivity to pricing shifts of a product.

Agricultural Risk Coverage Program

A U.S. government program that provides financial assistance to agricultural producers when crop revenues or yields fall below guarantee levels.

Agricultural Act

Legislation passed to regulate agricultural markets, support farm incomes, and provide price supports for farmers.

Food, Conservation, and Energy Act

A piece of U.S. legislation, often referred to as the 2008 Farm Bill, which governs agricultural and food policy, including conservation, energy, and support for farmers.