Author Question: The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate ... (Read 62 times)

shofmannx20 · **on:** Jul 1, 2018

The size of the reduction in quantity of labor hired by a firm due to an increase in the wage rate depends upon all of the following except
a. what percentage of total costs are made up of labor costs.
b. how much quantity demanded in the output market will be reduced by a higher price.
c. the capital to labor ratio before the wage increase.
d. how easily other inputs can be substituted for labor.

Question 2

The notion that when the price of an input falls, a firm's marginal cost curve shifts down and overall production increases so that more of every input is employed is known as
a. the output effect.
b. the substitution effect.
c. the input effect.
d. the cost effect.