Suppose Capital and Labor Must Be Used in Fixed Proportions

question 4

Multiple Choice

Suppose capital and labor must be used in fixed proportions to produce widgets and that the price elasticity of demand for widgets is zero.Then the wage elasticity of demand for labor by widget makers will be:

• A)+1.
• B) 1)
• C)0.
• D)infinite.

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Definitions:

Directionality Problem

In research, the issue of not knowing whether variable A causes variable B or vice versa.

Correlational Studies

Correlational studies are research methods that examine the relationship between two or more variables to determine if a statistically significant association exists, without inferring cause and effect.

Correlation

A statistical measure that indicates the extent to which two variables fluctuate together, without necessarily implying causation.

Independent Variable

The variable in an experiment that is manipulated or changed by the researcher to investigate its effect on the dependent variable.