. Supose that ·Total Factor Productivity increases ·Capital depreciates by 10% Everything else equal, what happens to labor demand in the economy? A. It decreases (i.e. shifts to the left of the demand curve) B. It increases (i.e. shifts to the right of the demand curve) C. Not enough information to answer 2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good? A. Yes B. No C. Only if the substitution effect dominates the income effect D. Only if the income effect dominates the substitution effect

. Supose that ·Total Factor Productivity increases ·Capital depreciates by 10% Everything else equal, what happens to labor demand in the economy? A. It decreases (i.e. shifts to the left of the demand curve) B. It increases (i.e. shifts to the right of the demand curve) C. Not enough information to answer 2. Does an increase in the wage causes leisure always to increase, because leisure is a normal good? A. Yes B. No C. Only if the substitution effect dominates the income effect D. Only if the income effect dominates the substitution effect

Principles of Microeconomics

7th Edition

ISBN:9781305156050

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 5CQQ

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