Suppose that the decline in prices of personal computers has reduced the demand for labor at a particular firm.We may conclude that at this firm:
A)computers and labor are pure complements
B)computers and labor are gross complements but not pure complements
C)computers and labor are gross substitutes
D)computers and labor are perfect substitutes

Question

Quizplus · Accepted Answer

If the decline in prices of personal computers has reduced the demand for labor at a particular firm, it indicates that computers and labor are gross substitutes. This means that the firm can replace labor with computers to produce the same amount of output at a lower cost. If computers and labor were complements, a decline in computer prices would lead to an increase in the demand for labor, as more computers would require more workers to operate them.

Suppose That the Decline in Prices of Personal Computers Has