ANSWER ALL QUESTIONS*

If demand for labor is ________, wage increases will result in a huge fall in labor hired by the firm

Question 1 options:

A)

Elastic

B)

Inelastic

C)	Unit Elastic

If the price of a complement input for production rises, the demand curve for inputishifts up (meaning more of this input is used).

Question 2 options:

	True
	False

By resisting technological advances that increase substitutability between labor and capital for instance, Unions are able to make the labor demand for their worker more ________ which helps maintain high wages

Question 3 options:

A)

Inelastic

B)

Elastic

C)	Unit Elastic

When the firm reduces its scale of operation due to the increase in marginal cost of production from a wage increase, this is known as the

Question 4 options:

A)	Scale effect

B)	Substitution effect

C)	Income effect

D)	Domino effect

Profit maximization in the long run implies that at the optimality condition

Question 5 options:

A)	All the options are correct

B)	The firm chooses the least-cost combination of capital and labor.

C)	This least-cost choice is where the isocost line is tangent to the isoquant.

D)	Marginal rate of technical substitution equals the ratio of input prices,w/r

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