In a competitive resource market, a decrease in the demand for a productive resource, ceteris paribus, will cause all of the following except a(n)
A)decrease in the price of the resource.
B)increase in the price of the resource.
C)decrease in the total income earned by all units of the resource.
D)decrease in the number of units of the resource that are employed.

Question

Quizplus · Accepted Answer

A decrease in demand for a resource, with all other factors being equal (ceteris paribus), leads to a decrease in the price of the resource, a decrease in the total income earned by the resource, and a decrease in the employment of the resource. It does not lead to an increase in the price of the resource.

In a Competitive Resource Market, a Decrease in the Demand