Consider the labor demand curve from the Classical model (with a Cobb-Douglas Produc- tion Function) and...
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Consider the labor demand curve from the Classical model (with a Cobb-Douglas Produc- tion Function) and the following statements
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An increase in technology shifts labor demand up
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An increase in capital shifts labor demand up
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An increase in the labor supply shifts labor demand down
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A ten unit change in capital has a larger impact than a ten unit change in technology when it comes to the labor demand curve
Which of the choices below is correct?
A. All of the above statements are true B. Statements 1, 2, and 3 are true C. Statements 1, 2, and 4 are true D. Statements 1 and 2 are true -
Homework Answers
Labor demand curve is the MRPL curve
MRPL=MR*MPL
an increase in technology will increase the MPL and increase the demand which will shift the demand curve to the right.
In Cobb Douglas production function, increase in capital will increase the MPL and thus increase the demand for labor.
Thus ans is D. Only first 2 statements are true
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