The Shape of a Competitive Firm's Input Demand Curve When

question 85

Multiple Choice

The shape of a competitive firm's input demand curve when all inputs are variable implies that:

• A)the output effect of an input price change outweighs the substitution effect of an input price change leading to lower employment at a lower price.
• B)the substitution effect of an input price change outweighs the output effect leading to a lower employment at a lower price.
• C)the substitution and output effect of an input price change both lead to higher employment at a lower price.
• D)the substitution and output effect of an input price change both lead to higher employment at a higher price.