Asked by
Esteban Pedraza
on Nov 26, 2024
Verified
If the price of capital declines, the consequent output effect would be
A) greater, the more elastic the demand for the product.
B) greater, the less elastic the demand for the product.
C) negative.
D) of consequence only if capital and labor are used in fixed proportions.
Output Effect
The output effect is the change in total revenue resulting from selling additional units of a product, considering the impact on price due to supply and demand.
Elastic Demand
A condition where the quantity demanded of a good or service is highly responsive to changes in its price.
- Explore the implications of input price changes on the allocation of resources and behavior of corporations.
- Outline the response of substitution and output effects to modifications in input prices.
- Identify how changes in input prices influence firms' production costs and their decision-making processes.
Verified Answer
GJ
Learning Objectives
- Explore the implications of input price changes on the allocation of resources and behavior of corporations.
- Outline the response of substitution and output effects to modifications in input prices.
- Identify how changes in input prices influence firms' production costs and their decision-making processes.