Suppose the Productivity of Labor Increases and at the Same

question 50

Multiple Choice

Suppose the productivity of labor increases and at the same time the price of capital, which is complementary to labor, increases. As a result, the demand for labor

• A)will increase.
• B)will decrease.
• C)may either increase or decrease.
• D)will not change.

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Definitions:

Mixed Strategies

In game theory, a strategy that allows for the randomization of choices among different options to achieve a certain outcome.

Pure Strategies

In game theory, a pure strategy is an action chosen by a player where they select a specific move to follow in every possible situation within a game.

Dominant Strategy

A strategy in game theory that yields the best outcome for a player, regardless of what the other players do.

Payoff

The gain or loss that an investor or a player in a game receives as a result of a particular action or decision.