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- Production Factorseconomics-mcqs › production-factors
- Published
- 30 May 2019
- Last updated
- 28 May 2026
Imagine a war fought using biological weapons that eliminate human labor but leave physical capital intact. Compared to the pre-war period, what changes would you expect in the equilibrium wages and rental prices after the conflict?
Multiple choice question for Production Factors. Select an option, then review the explanation below.
Explanation
When biological weapons reduce the labor force but leave capital untouched, the scarcity of labor causes wages to rise due to higher demand relative to supply. Meanwhile, the abundance of capital relative to labor lowers the rental rates on capital. Hence, wages go up and rental rates fall after the war.
More Production Factors MCQs
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- 3.Why does the demand curve for an individual firm's factor of production slope downward?
- 4.Which of the following is NOT a likely result of a reduction in the supply of agricultural tractors?
- 5.How does a reduction in the number of fishermen affect the market for capital goods, such as fishing boats, in the fishing sector?