Suppose Capital Is Readily Substitutable for Labor and That the Price

question 155

Multiple Choice

Suppose capital is readily substitutable for labor and that the price of capital falls. We can conclude that the

• A) substitution effect will tend to reduce the demand for labor.
• B) output effect will tend to reduce the demand for labor.
• C) demand for labor will necessarily decline.
• D) demand for labor will necessarily increase.

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Definitions:

Sleeping Pills

Medications used to facilitate or improve the quality of sleep in individuals with sleep disorders.

REM Sleep

A stage of sleep characterized by rapid eye movements, during which most vivid dreaming occurs.

Alcohol

A psychoactive substance found in beverages such as beer, wine, and spirits, known for its effects on mood, behavior, and health.

Night Terrors

Intense episodes of fear that occur during sleep, often causing the person to wake up in a terrified state.