Which of the following will decrease a firms demand for a resource? Decreased pr
ID: 1113752 • Letter: W
Question
Which of the following will decrease a firms demand for a resource?
Decreased productivity of the resource.
Decreased price of the output created by the resource.
A decrease in the price of a substitute resource (e.g. robots that can do a workers job).
An increase in the price of a complimentary resource (e.g. hammers that help a roofer).
All of the above will decrease a firm s demand for a resource.
Decreased productivity of the resource.
Decreased price of the output created by the resource.
A decrease in the price of a substitute resource (e.g. robots that can do a workers job).
An increase in the price of a complimentary resource (e.g. hammers that help a roofer).
All of the above will decrease a firm s demand for a resource.
Explanation / Answer
All of the above options are correct (Option 5)
A decrease in the price of a substitute and an increase in the price of a complimentary resource would both decrease the demand for a resource. Similarly, decreased productivity and decrease in price of the output would also lead to the same result. (Demand is given by VMPL curve (VMPL = MPL x P), therefore, when either P or MPL decreases, demand would also decrease)
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