Multiple Choice QuestionWhen the relative cost of labor rises, a decision must be made whether to substitute and decrease the use of labor and increase the use of another resource input such as machines in order to produce the same amount of output at a lower cost. This statement describes the Blank______ effect.Multiple choice question.netresourcesubstitutionoutput

Multiple Choice QuestionWhich of the following exemplifies the substitution effect in regard to substitute resources?Multiple choice question.A decline in the price of machinery prompts a firm to substitute labor for machinery, allowing it to produce at the lower cost of machinery.A decline in the price of machinery prompts a firm to substitute machinery for labor, allowing it to produce output at the lower cost of machinery.An increase in the price of machinery and labor prompts a firm to substitute cheaper machines and less-skilled workers.An increase in the price of machinery prompts a firm to substitute machinery for labor, allowing it to produce at the lower cost.

Multiple Choice QuestionImprovements in the quality of a variable resource increase Blank______ and therefore its demand.Multiple choice question.costsmarginal productivityqualityresource supplymarginal supply

Multiple Choice QuestionWhen a firm in a competitive labor market is a wage taker, for each additional unit of labor hired, the total resource cost Blank______.Multiple choice question.decreases by exactly the amount of the constant market wage ratecan no longer be related to the market wage rateincreases by exactly the amount of the constant market wage ratestays constant at the market wage rate

Multiple Choice QuestionWhich of the following add nothing to the firm's output, but increase the firm's costs?Multiple choice question.Network effectsTechnological advancesEconomies of scaleRent-seeking expenditures

Multiple Choice QuestionWhich of the following infers the direction of the change in the demand for resource labor due to a change in capital?Multiple choice question.The direction of the change in labor demand will depend on whether labor and capital are solely substitutes in productionThe direction of the change in labor demand will depend on whether labor and capital are solely complements in productionThe direction of the change in labor demand will depend on whether labor and capital are substitutes or complements in productionThe direction of the change in labor demand will depend on whether labor and capital are normal or inferior goods in production