According to the Output Effect of a Factor Price Change

question 97

Multiple Choice

According to the output effect of a factor price change, if supply of labor decreases, then once the firm fully adjusts to the labor supply change, it

• A) increases output and thus demand for all inputs increases.
• B) decreases output and thus demand for all inputs decreases.
• C) decreases demand for labor alone and there is no change in its output level.
• D) decreases output and decreases demand for labor.

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Definitions:

Central Focus

The primary or most important point of attention or activity.