When the Price of Labor Increases

question 12

Multiple Choice

When the price of labor increases,

• A) a firm will increase the amount of capital used in the short run because it is cheaper.
• B) a firm will increase the amount of capital used in the long run because it is cheaper.
• C) a firm will decrease the amount of capital used in the long run because it is more costly.
• D) a firm will not change the amount of capital used in the long run because an increase in the price of labor does not affect capital.
• E) it is ambiguous how the firm will adjust the level of capital in the long run.

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Definitions:

Sociocultural Perspective

An approach in psychology that examines how societal and cultural influences impact human behavior and mental processes.

Customs

Traditional practices or behaviors that are characteristic of a specific society, place, or time, often relating to the conduct of everyday life.

Beliefs

Cognitive representations about the world, oneself, or others, that are accepted by an individual as true or existing.

Evolutionary Psychology

A theoretical approach in the social and natural sciences that examines psychological structure from a modern evolutionary perspective.