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:

Worker Participation

The involvement of employees in decision-making processes and aspects of workplace governance.

Quality Circles

Groups of employees who meet regularly to discuss and propose solutions to workplace problems, aiming to improve the organization’s performance and the quality of its products or services.

Host-Country Nationals

Employees who are citizens of the country in which a multinational company's branch or office is located, not the country of the company's headquarters.

Expatriates

Employees or individuals who live outside their native country, often temporarily, for work assignments or professional reasons.