Which of the following policies may decrease the level of capital intensity in industry?
A)an increase in the cost of capital
B)a decrease in the minimum wage
C)an increase in the elasticity of substitution
D)all of the above.

Question

Quizplus · Accepted Answer

All the options listed can potentially decrease the level of capital intensity in industry. An increase in the cost of capital makes it more expensive for firms to invest in machinery and equipment, potentially leading them to use more labor instead. A decrease in the minimum wage can make labor more affordable relative to capital, encouraging firms to substitute labor for capital. An increase in the elasticity of substitution means it's easier for firms to substitute labor for capital, which can also lead to a decrease in capital intensity.

Which of the Following Policies May Decrease the Level of Capital