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- Subject
- Human Capitaleconomics-mcqs › human-capital
- Published
- 1 Jun 2019
- Last updated
- 28 May 2026
How does an increase in the cost of labor affect the quantity of labor employed and the resulting output due to the substitution effect?
Multiple choice question for Human Capital. Select an option, then review the explanation below.
Explanation
When the price of labor rises, the substitution effect causes firms to use less labor, which in turn lowers the total output produced.
More Human Capital MCQs
Practice related questions from the same subject.
- 1.From the perspective of the human capital theory, what is the role of education?
- 2.What does the signaling theory of education primarily suggest?
- 3.When two positions demand equal skills and experience, which job is generally the one offering higher pay?
- 4.Which statement accurately describes the relationship between attractiveness and earnings among workers?
- 5.Which profession has the highest potential to earn income comparable to a superstar?