If the Price of Labor Falls

question 116

Multiple Choice

If the price of labor falls,

• A) we can conclude that the demand for capital will always decrease because only the input-substitution effect is relevant.
• B) we can conclude that the demand for capital will always increase because only the output effect is relevant.
• C) the change in the demand for capital cannot be predicted because the input-substitution effect and output effect work in opposite directions.
• D) the demand for capital will be unaffected, because only a change in the price of capital would change the demand for capital.

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Definitions:

Polar Molecules

Molecules exhibiting a distribution of charge due to differences in electronegativity between bonded atoms, resulting in dipole moments.

Solvents

Substances that dissolve a solute, resulting in a solution, widely used in chemical reactions, process separations, and product formulations to dissolve, suspend or extract materials.

Triple Bond

A chemical bond in which three pairs of electrons are shared between two atoms, creating a strong connection that is found in certain organic and inorganic compounds.

Functional Groups

Distinct clusters of atoms present in molecules that drive the typical chemical reactions associated with these molecules.