It is profitable for Jack's Jingles to use more equipment in the production of its songs when the
A) rental price of land decreases.
B) rental price of capital increases.
C) wages of workers falls.
D) rental price of capital decreases.
E) marginal product of labor falls.

Question

Quizplus · Accepted Answer

When the rental price of capital decreases, it becomes cheaper for Jack's Jingles to use more equipment in the production process. This is because the cost of renting additional capital (i.e. equipment) has decreased, making it more profitable for the company to use more of it. As a result, the company can increase its production output and potentially generate higher profits.

It Is Profitable for Jack's Jingles to Use More Equipment