Two Resource Inputs, Capital and Labor, Are Complementary and Used

question 289

Multiple Choice

Two resource inputs, capital and labor, are complementary and used in fixed proportions. An increase in the price of capital will

• A)increase the demand for labor.
• B)decrease the demand for labor.
• C)decrease the quantity demanded for labor.
• D)have no effect, because the relationship is fixed.

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Definitions:

Demand

The amount of a product or service that buyers are ready and capable of buying at different price levels over a specified time frame.

Increase

A situation where there is a growth or rise in figures, amounts, or indicators in an economic context.

Demand Curve

A graphical representation that shows the relationship between the price of a good and the quantity demanded by consumers.

Demand

The quantity of a good or service that consumers are willing and able to purchase at various prices during a given period.