If Labor and Capital Are Substitute Resources in Production, an Increase

question 21

Multiple Choice

If labor and capital are substitute resources in production, an increase in the price of capital will

• A)increase the wage rate and decrease the number of workers hired.
• B)decrease the wage rate and increase the number of workers hired.
• C)decrease the wage rate and decrease the number of workers hired.
• D)increase the wage rate and increase the number of workers hired.

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Definitions:

Base Value

A reference or initial value used for comparison or calculation purposes in finance and economics.

Rate of Decrease

A measure of how quickly a quantity is diminishing over time, often expressed as a percentage or a ratio.

Percentage

A portion or share expressed as a fraction of 100, commonly used to compare differences in quantities.

Percentage

A rate, number, or amount in each hundred, represented by the symbol %.