If a firm introduces some technology that substitutes capital for labor, ________, assuming all else equal.
A) there will be an upward movement along the labor demand curve of the firm
B) there will be a downward movement along the labor demand curve of the firm
C) there will be a rightward shift in the labor demand curve of the firm
D) there will be a leftward shift in the labor demand curve of the firm
Question 2
A country has an aggregate production function of the form: Y = A x K1/3 x H2/3.
Which of the following is likely to happen if the capital stock and the efficiency units of labor available to the country increases by 10 over a span of 5 years while the state of technology used in the country remains the same?
A) Output will increase by 5. B) Output will double.
C) Output will increase by 10. D) Output will increase by 1.