Which of the following will occur when the capital stock falls?
A)profit per unit of capital will increase
B)profit per unit of capital will decrease
C)there will be no change in profit per unit of capital
D)there will be an ambiguous effect on profit per unit of capital
E) none of the above

Question

Quizplus · Accepted Answer

When the capital stock falls, the remaining capital becomes more scarce and potentially more valuable for production, leading to an increase in profit per unit of capital as firms may be willing to pay more for the use of the now scarcer capital resources.

Which of the Following Will Occur When the Capital Stock