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How Does a Temporary Technological Improvement That Raises Labor's Marginal

Question 42

Multiple Choice

How does a temporary technological improvement that raises labor's marginal productivity affect the supply of labor?


A) There is no change in labor supply-changes in marginal productivity affect only labor demand.
B) The fall in labor supply is greater than if the improvement were permanent.
C) Labor supply will rise only if employers are willing to pay compensating differentials.
D) Income effects lower labor supply,while intertemporal substitution raises labor supply.

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