If unskilled labor and capital are substitutes,
A)demand for unskilled labor increases when the price of capital decreases.
B)the cross-elasticity between unskilled labor and capital is positive.
C)the price of unskilled labor decreases when the price of capital increases.
D)the price of capital is increasing.
E)the demand curve for capital is upward-sloping.

Question

Quizplus · Accepted Answer

When two goods are substitutes, an increase in the price of one leads to an increase in the demand for the other, resulting in a positive cross-elasticity.

If Unskilled Labor and Capital Are Substitutes