Asked by Smooth Deion on May 22, 2024
Verified
Suppose a technological improvement increases the productivity of a firm's capital and,simultaneously,its workers' union negotiates a wage increase.We can predict that:
A) the firm will use relatively more capital and relatively less labor.
B) the firm will use relatively more labor and relatively less capital.
C) inputs of capital and labor will be unchanged.
D) the firm's equilibrium output will necessarily increase.
Productivity
A measure of the efficiency of production, often calculated as the ratio of outputs produced to inputs used in the production process.
Capital
Financial assets or the financial value of assets, such as cash and goods, used to generate wealth through investment.
Labor
Labor refers to the human effort, both physical and mental, used to produce goods and services.
- Understand how technological improvements and wage changes affect the firm's use of capital and labor.
Verified Answer
Learning Objectives
- Understand how technological improvements and wage changes affect the firm's use of capital and labor.
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