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:

Flakes

Small, thin pieces of something, typically broken off from a larger piece, often used in reference to stone tool production in archaeology.

Breeding Population

A group of organisms of the same species that interbreed and produce fertile offspring in a particular geographic area.

Genetic Isolation

A reduction in genetic variation that occurs when a population is geographically separated from other populations, potentially leading to speciation.

Reproductive Capacity

The potential or ability of an organism or population to produce offspring in a given environment.