If the Price of Capital Falls,in the Long Run Under

question 160

Multiple Choice

If the price of capital falls,in the long run under what circumstance could the demand for labor increase?

• A) The demand for labor can never increase when the price of capital falls.
• B) The demand for labor will always increase when the price of capital falls.
• C) It increases if the scale of production increases enough.
• D) It increases if the demand for labor is inelastic.
• E) None of the above answers is correct.

---

Definitions:

Disposable Income

Income remaining after deduction of taxes and other mandatory charges, available to be spent or saved as one wishes.

Interest Rate

The cost of borrowing money, expressed as a percentage of the total amount loaned.

Net Wealth

The total value of all financial and non-financial assets owned by an individual or entity minus any liabilities.

Future Prices

The expected price of a commodity, security, or currency set in a futures contract for delivery and payment at a specified future date.