Suppose the price of capital falls relative to the wage rate and, as a result, the demand

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Suppose the price of capital falls relative to the wage rate and, as a result, the demand for labor increases. Are these inputs gross substitutes, or are they gross complements?

What can you infer about the relative strengths of the output and substitution effects?

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Contemporary Labor Economics

ISBN: 9780073375953

9th Edition

Authors: Campbell McConnell, Stanley Brue, David Macpherson

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