If an Increase in the Cost of Labor Causes the Firm

question 41

Multiple Choice

If an increase in the cost of labor causes the firm to use less capital,then

• A) the scale effect has dominated over the substitution effect.
• B) the substitution effect has dominated over the scale effect.
• C) the firm has moved along an isoquant curve.
• D) the firm has moved onto a higher isoquant.

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Definitions:

Deductions

Amounts that are subtracted from gross income when calculating taxable income, including expenses, allowances, or specific exemptions.

Exemptions

Specific allowances that relieve individuals, organizations, or products from fulfilling certain conditions or requirements, often for taxes or regulations.

Personal Income Tax

A tax levied on individuals or households based on their total income from various sources, including wages, salaries, and investments.

Taxable Income

The portion of an individual's or corporation’s income that is subject to taxes according to the laws and regulations of a particular jurisdiction.