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Andressa Souza Costa Oliveira
on Oct 12, 2024

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When the wage rate falls,if the substitution effect outweighs the output effect,the use of machinery will

A) rise.
B) fall.
C) remain the same.

Substitution Effect

The change in demand for a good or service that occurs when its price increases or decreases, leading consumers to substitute it with other goods or services that are relatively more or less expensive.

Output Effect

The impact on the total production of goods and services in an economy resulting from changes in demand, supply, technology, or factors of production.

  • Understand the effects of complementary and substitute resources on productivity.
  • Identify the differences between the substitution effect and the output effect and how they affect resource distribution.
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AA
Angelica ArrunateguiOct 17, 2024
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