The Supply of Both Physical and Human Resources in the Long

question 97

Multiple Choice

The supply of both physical and human resources in the long run is determined primarily by

• A) the presence or absence of economies of scale.
• B) investment choices and resource depreciation.
• C) sunk costs; what happens in the present cannot change the future.
• D) the law of diminishing marginal returns.

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Definitions:

Income Effect

It refers to the change in an individual's or economy's income and how that change will affect the quantity demanded of a good or service.

Utility Maximizing

A concept in economics that refers to the idea that individuals choose to allocate their resources in a way that maximizes their utility or satisfaction.

Wage Increase

An upsurge in the rate of pay employees receive for their labor, typically expressed as a percentage increase over current wages.

Substitution Effect

The change in consumption patterns due to a price change, leading consumers to substitute one product for another.