Before ATMs, the average bank branch employed 20 employees; after ATMs, the average branch employed 13 employees, but banks have opened more branches. These developments suggest that
A) ATMs are purely substitutes for labor in banking.
B) labor and ATMs are substitutes in some bank functions, complements in others.
C) ATMs are purely complements for labor in banking.
D) labor and ATMs are neither substitutes nor complements in banksâ€™ various functions.

Question

Quizplus · Accepted Answer

The decrease in average employees per bank branch suggests that ATMs are substitutes for some bank functions that were previously performed by employees. However, the fact that banks have opened more branches suggests that the overall demand for banking services has increased, leading to more employment opportunities in different functions. Therefore, labor and ATMs are substitutes in some bank functions, complements in others.

Before ATMs, the Average Bank Branch Employed 20 Employees; After