Author Question: The output effect of a change in the wage rate on a firm's demand for labor input will be greater ... (Read 46 times)

HudsonKB16 · **on:** Jul 1, 2018

The output effect of a change in the wage rate on a firm's demand for labor input will be greater
a. the larger the share of labor costs in total costs and the greater the price elasticity of demand for output.
b. the larger the share of labor costs in total costs and the smaller the price elasticity of demand for output.
c. the larger the share of labor costs in total costs and the higher the quantity demanded.
d. the smaller the possibilities of substituting capital for labor.

Question 2

The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant
a. the greater the change in output.
b. the more sharply curved are the firm's isoquants.
c. the flatter are the firm's isoquants.
d. the larger the quantity of labor employed.