If the price of capital falls,in the long run under what circumstance could the demand for labor increase?
A) The demand for labor can never increase when the price of capital falls.
B) The demand for labor will always increase when the price of capital falls.
C) It increases if the scale of production increases enough.
D) It increases if the demand for labor is inelastic.
E) None of the above answers is correct.

Question

Quizplus · Accepted Answer

If the scale of production increases enough due to the fall in the price of capital, more labor may be needed to meet the increased demand for production. As a result, the demand for labor can increase even if the price of capital falls.

If the Price of Capital Falls,in the Long Run Under