Comment on the following statement: A firm's demand for labor can ...

[ssal]

Comment on the following statement: A firm's demand for labor can be affected by the availability of other inputs.
 
  What will be an ideal response?

Question 2

The Internet has created a new category in the book selling market, namely, the barely used book. How does the availability of barely used books affect the market for new books?
 
  A) The demand curve for new books shifts to the right.
  B) The supply curve for new books shifts to the left.
  C) The demand curve for new books shifts to the left.
  D) The supply curve for new books shifts to the right.

[mjenn52]

Answer to Question 1

The statement is true. If two inputs are complements, the presence of one will increase the productivity of the other. For example, if capital and labor are complements, the presence of capital will increase the demand for labor. However, it is possible for two inputs to be substitutes for one another. In that case, the presence of one will lead to a drop in the demand for the other.

Answer to Question 2

C