4 K K₁ Ko Slope =-w₁/ro E₁ Es N, Ns Eo No Qo Q₁ Slope =-wo/ro N Suppose Qo is the profit-maximizing quantity of output

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4 K K Ko Slope W Ro E Es N Ns Eo No Qo Q Slope Wo Ro N Suppose Qo Is The Profit Maximizing Quantity Of Output 1 (128.82 KiB) Viewed 9 times

4 K K Ko Slope W Ro E Es N Ns Eo No Qo Q Slope Wo Ro N Suppose Qo Is The Profit Maximizing Quantity Of Output 2 (115.33 KiB) Viewed 9 times

4 K K₁ Ko Slope =-w₁/ro E₁ Es N, Ns Eo No Qo Q₁ Slope =-wo/ro N

Suppose Qo is the profit-maximizing quantity of output when wage is wo and cost of capital is ro, and Q1 is the profit-maximizing quantity of output when wage is wo and cost of capital is ro. Which of the following is true? O a. The scale effect on labour increases demand for labour. O b. The substitution effect on labour is larger than the scale effect. O c. The substitution effect on labour is smaller than the scale effect. O d. The scale effect on capital increases demand for capital.