Suppose the marginal product of labor equals 1/L. If the wage is ...

[geodog55]

Suppose the marginal product of labor equals 1/L. If the wage is 1 per unit of labor, what is the short-run effect on the firm's labor demand if the price of output were to double?
 
  A) The firm will demand half as much labor.
  B) The firm will demand twice as much labor.
  C) The firm will demand the same quantity of labor.
  D) There is not enough information to determine.

Question 2

Why would a usury law result in banks making less credit available to low-income households?
 
  What will be an ideal response?

[Tabitha_2016]

Answer to Question 1

B

Answer to Question 2

Without restrictions, banks would charge a higher rate to riskier borrowers. Lower-income households pose a greater risk of repayment than do higher-income households. With a usury law, a ceiling on interest rates is imposed on banks. Banks grant loans to the least risky applicants. As a result, less credit is made available to the most risky applicants, who tend to be lower-income households.