If a factor's productivity falls, ceteris paribus, a firm should buy more of this factor.

Name: If a factor's productivity falls, ceteris paribus, a firm should buy more of this factor.
Brand: Quizplus
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Question

Quizplus · Accepted Answer

If a factor's productivity falls, ceteris paribus, it becomes less efficient for the firm to use, so the firm should not buy more of it unless it becomes cheaper relative to its productivity or other factors become even less productive or more expensive.

If a Factor's Productivity Falls, Ceteris Paribus, a Firm Should