If a Technological Change Makes It Easier to Substitute Capital

question 32

Multiple Choice

If a technological change makes it easier to substitute capital for labour, the demand curve for labour

• A) shifts parallel to the left.
• B) is not affected.
• C) becomes more inelastic.
• D) becomes more elastic.
• E) shifts parallel to the right.

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Definitions:

Long Run

A period in economics where all factors of production and costs are variable, allowing companies to adjust to market demands.

Prices

The amount of money required to purchase a good or service, serving as a signal for scarcity and demand in the market.

Unemployment

The condition of being jobless and actively seeking employment.

Phillips Curve

An economic concept illustrating an inverse relationship between rates of unemployment and rates of inflation within an economy.