You own a business that answers telephone calls for physicians after their offices close. You have an incentive to substitute capital for labor if the
A) price of capital increases.
B) price of labor decreases.
C) price of capital decreases.
D) marginal product of labor increases.

Question

Quizplus · Accepted Answer

When the price of capital decreases, it becomes more cost-effective to substitute capital (such as automated systems or software) for labor, as the lower cost of capital makes it a more attractive option compared to the cost of labor.

You Own a Business That Answers Telephone Calls for Physicians