An increase in the supply of capital, which is a complement to labor, will lead to
A)a decrease in the quantity of labor demanded.
B)an increase in the demand for labor.
C)a decrease in the demand for labor.
D)an increase in the quantity of labor demanded.

Question

Quizplus · Accepted Answer

An increase in the supply of capital will lead to increased productivity, which will lead to an increase in demand for labor, thereby increasing the quantity of labor demanded. Capital and labor are considered complementary factors of production, so an increase in one will increase the demand for the other.

An Increase in the Supply of Capital, Which Is a Complement