If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.

Name: If the substitution effect outweighs the output effect, an increase in the price of a substitute resource will increase the demand for labor.
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Question

Quizplus · Accepted Answer

When the substitution effect outweighs the output effect, firms will substitute the more expensive resource with labor, increasing the demand for labor.

If the Substitution Effect Outweighs the Output Effect, an Increase