Assume That Skilled Labor and Energy Are Substitutes in Production

Assume that skilled labor and energy are substitutes in production. An increase in energy prices is then predicted to:

A) unambiguously increase the demand for skilled labor
B) unambiguously decrease the demand for skilled labor
C) increase the demand for skilled labor if the output effect outweighs the substitution effect
D) decrease the demand for skilled labor if the output effect outweighs the substitution effect

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