What are the likely effects on capital usage and input demand if workers experience an increase in their real wages?

Show Answers

Promote greater capital utilization over time and decrease demand for all inputsStimulate higher capital usage and boost demand for all production inputsLead to reduced capital usage and lower demand for all inputsResult in less capital employed and a decline in demand for all inputs

Explanation

When real wages rise, labor becomes more expensive, prompting firms to cut back on capital usage and reduce overall input demand to control costs.