The firm's production function is given as follows: qx = f (Lx, Kx). qx represents the output produced by the firm, Lx represents the labor input and Kx the capital input. In the long-run, the firm uses both inputs to produce output. An increase in the supply of capital (K) reduces the cost of capital from $6 per unit to $2 per unit. As a result, the firm's demand for the labor input (L) decreases from 200 to 120 units. Based on this information, the cross-price elasticity of labor demand is: O a. 0.50 O b.-0.25 Oc 0.25 O d.0.75

The firm's production function is given as follows: qx = f (Lx, Kx). qx represents the output produced by the firm, Lx represents the labor input and Kx the capital input. In the long-run, the firm uses both inputs to produce output. An increase in the supply of capital (K) reduces the cost of capital from $6 per unit to $2 per unit. As a result, the firm's demand for the labor input (L) decreases from 200 to 120 units. Based on this information, the cross-price elasticity of labor demand is: O a. 0.50 O b.-0.25 Oc 0.25 O d.0.75

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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