1) Technological change that results in a reduction in the price of capital (or equivalently, the availability of a new type of capital) is more likely to stimulate demand for a particular type or labour if
a) capital costs accounts for a small share of total costs
b) demand for final product is elastic
c) the supply of labour is inelastic
d) all of the above
2) Suppose the government promises to pay workers who lose their sights in a workplace accident $100,000 regardless of earnings before accident. This payment would create
a) pure income effect
b) pure substitution effect
c) reinforcing income and substitution effects
d) counteracting income and substitution effects