The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant
A)the greater the change in output.
B)the more sharply curved are the firm's isoquants.
C)the flatter are the firm's isoquants.
D)the larger the quantity of labor employed.

Question

Quizplus · Accepted Answer

The substitution effect of a change in wage rate on a firm's demand for labor input will be more significant the more sharply curved are the firm's isoquants. Sharply curved isoquants indicate that labor and capital are poor substitutes for each other, making the substitution effect more pronounced when the wage rate changes.

The Substitution Effect of a Change in Wage Rate on a Firm's