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If the Wage Rate Rises and There Is a Net

Question 78

Multiple Choice

If the wage rate rises and there is a net decrease in the use of capital by a firm


A) the substitution effect outweighed the output effect.
B) the output effect outweighed the substitution effect.
C) the substitution and output effects were equal.
D) there is no way to determine the relative strengths of the output and substitution effects.

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