Statement I.We say that two resources are complements in production if an increase in one requires a decrease in the other.
Statement II.Capital and labor are both complementary resources and substitute resources.

Question

Quizplus · Accepted Answer

Statement I is false because complements in production mean that an increase in the use of one resource increases the productivity of another, not requires a decrease. Statement II is true because capital and labor can be substitutes (e.g., machines replacing workers) and complements (e.g., machines enhancing workers' productivity).