Multiple Choice
A change in an input price will alter both production costs and the profit-maximizing output. Thus, a decline in the price of capital will reduce production costs, increase the profit-maximizing output, and thereby increase the demand for labor. This describes the
A) output effect.
B) substitution effect.
C) idea of derived demand.
D) law of diminishing returns.
Correct Answer:
Verified
Correct Answer:
Verified
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