Multiple Choice
If technology dictates that labor and capital must be used in fixed proportions, an increase in the price of capital will cause a firm to use
A) more labor as a consequence of the substitution effect.
B) more labor as a consequence of the output effect.
C) less labor as a consequence of the substitution effect.
D) less labor as a consequence of the output effect.
Correct Answer:
Verified
Correct Answer:
Verified
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