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Skilled Labor Will Benefit from an Increase in the Wage

Question 5

Multiple Choice

Skilled labor will benefit from an increase in the wage rate paid to unskilled labor if:


A) the substitution effect outweighs the output effect
B) the output effect outweighs the substitution effect
C) the output effect and substitution effect work in opposite directions
D) skilled labor and unskilled labor are gross complements

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