The role of the costs of capital is influenced by the degree to which firms can substitute capital for other inputs of production known as relative prices.

Question

Quizplus · Accepted Answer

The statement is true, as the costs of capital will affect the cost of production and in turn affect the relative prices of the inputs. Firms can substitute capital for other inputs, and the degree of substitution can impact the cost of capital and the overall cost of production.

The Role of the Costs of Capital Is Influenced by the Degree