Assume the Price of Capital Doubles And, as a Result

question 40

Multiple Choice

Assume the price of capital doubles and, as a result, firms make no change in the relative quantities of capital and labor they employ. This implies that

• A) labor is not readily substitutable for capital.
• B) the law of diminishing returns is not applicable.
• C) the firms are producing an inferior good.
• D) the demand for capital is highly price elastic.

---

Definitions:

Larger Groups

The concept where the size of a group exceeds what is considered small, influencing dynamics and interactions within.

Success

The achievement of a goal or the attainment of a desired objective or outcome.

Process Loss

The reduction in team performance due to inefficiencies in group processes, such as coordination problems and conflict.

Task Force

A temporary group assembled to focus on a specific task or project, often multidisciplinary, aiming for a particular goal.