If energy and unskilled labor are gross complements,an increase in the price of energy will:
A)increase the supply of unskilled labor,decreasing the unskilled wage
B)increase the demand for unskilled labor,raising the unskilled wage
C)decrease the demand for unskilled labor,decreasing the unskilled wage
D)either increase or decrease the demand for unskilled labor,depending on the relative strengths of the output effect and the substitution effect

Question

Quizplus · Accepted Answer

If energy and unskilled labor are gross complements, an increase in the price of energy will make it more expensive to produce goods that require both inputs. This will lead to a decrease in the demand for unskilled labor, thereby decreasing the unskilled wage.

If Energy and Unskilled Labor Are Gross Complements,an Increase in the Price