Suppose a Technological Improvement Increases the Productivity of a Firm's

question 18

Multiple Choice

Suppose a technological improvement increases the productivity of a firm's capital and, simultaneously, its workers' union negotiates a wage increase. We can predict that

• A) the firm will use relatively more capital and relatively less labor.
• B) the firm will use relatively more labor and relatively less capital.
• C) inputs of capital and labor will be unchanged.
• D) the firm's equilibrium output will necessarily increase.

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Definitions:

Equitable Parity Rule

A legal principle ensuring fair treatment of all parties by balancing interests in a judicial or contractual scenario.

Express Authority

Explicit permission granted to an individual or entity to act on behalf of another, typically in a legal or business context.

Disclosed Principal

A principal whose identity is known to a third party. The third party is aware that the agent is making an agreement on behalf of the principal.

Scope of Authority

The range or extent of power granted to an individual or entity to act on behalf of another, particularly in legal or contractual contexts.