123. If an increase in the use of one factor of production increases the demand
ID: 1251978 • Letter: 1
Question
123. If an increase in the use of one factor of production increases the demand for the other, the two factors are:
A) normal factors of production.
B) substitute factors of production.
C) inferior factors of production.
D) complementary factors of production.
125. The more work a person does, all other things unchanged, then the:
A) greater his or her free time.
B) greater his or her nonmarket use of time.
C) less his or her income.
D) less his or her leisure.
126. The price of an extra hour of leisure is:
A) $1.
B) the hourly wage rate.
C) the same as the price of money.
D) the total utility of labor.
127. In terms of labor supply, the substitution effect of a higher wage causes a(n):
A) increase in leisure time.
B) decrease in the quantity of labor supplied.
C) substitution of work for leisure.
D) reduction of work time to zero.
Explanation / Answer
123. If an increase in the use of one factor of production increases the demand for the other, the two factors are:A) normal factors of production.
B) substitute factors of production.
C) inferior factors of production.
D) complementary factors of production.
If the demand for one factor increases the demand for another fator than they should be complements.As they are used together
125. The more work a person does, all other things unchanged, then the:
A) greater his or her free time.
B) greater his or her nonmarket use of time.
C) less his or her income.
D) less his or her leisure. A person has an option to work or leisure. If most of his time is spent on work than he will be having less leisure.
126. The price of an extra hour of leisure is:
A) $1.
B) the hourly wage rate.
C) the same as the price of money.
D) the total utility of labor. Price of leisure is the opportunity forgone to earn. Thus price of 1 hr leasure is eqaul to the i hr wage rate if he/she works for that hour.
127. In terms of labor supply, the substitution effect of a higher wage causes a(n):
A) increase in leisure time.
B) decrease in the quantity of labor supplied.
C) substitution of work for leisure.
D) reduction of work time to zero. Higher wages increases the opportunity cost of leisure or the price of leisure. Generally people prefer not to pay a higher price to any thing. Thus higher wage makes leasure costly making individulas to work. i.e individulas substitute work for leasure
A person has an option to work or leisure. If most of his time is spent on work than he will be having less leisure.
126. The price of an extra hour of leisure is:
A) $1.
B) the hourly wage rate.
C) the same as the price of money.
D) the total utility of labor. Price of leisure is the opportunity forgone to earn. Thus price of 1 hr leasure is eqaul to the i hr wage rate if he/she works for that hour.
127. In terms of labor supply, the substitution effect of a higher wage causes a(n):
A) increase in leisure time.
B) decrease in the quantity of labor supplied.
C) substitution of work for leisure.
D) reduction of work time to zero. Higher wages increases the opportunity cost of leisure or the price of leisure. Generally people prefer not to pay a higher price to any thing. Thus higher wage makes leasure costly making individulas to work. i.e individulas substitute work for leasure
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