Suppose the price of capital falls relative to the wage rate and, as a result, the demand for labor increases Are these inputs gross substitutes, or are they gross complements? What can you infer...

Suppose the price of capital falls relative to the wage rate and, as a result, the demand for labor increases Are these inputs gross substitutes, or are they gross complements? What can you infer about the relative strengths of the output and substitution effects?

May 16, 2022
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