Principles of Economics, 7th Edition

Published by South-Western College
ISBN 10: 128516587X
ISBN 13: 978-1-28516-587-5

Chapter 18 - Part VI - The Markets for the Factors of Production - Quick Check Multiple Choice - Page 391: 6

Answer

d) wages fall, and the rental price of capital rises.

Work Step by Step

The storm destroyed multiple factories, so the stock of capital decreases. The equilibrium price for the stock of capital increases. Since there are fewer pieces of capital, fewer workers will be employed. With fewer workers employed, wages fall for those workers.
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