When factors of production are not fixed (as in the long run) and labor immigrates, capital will:
A) remain fixed because capital is never mobile.
B) increase in the capital-intensive industry.
C) move to the higher productivity use in the labor-intensive industry until returns are again equalized.
D) become idled as owners of capital seek more profitable opportunities.

Question

Quizplus · Accepted Answer

In the long run, factors of production are flexible, including labor, which means that it can immigrate to other countries or industries. This mobility of labor will lead to the capital moving to the higher productivity use in the labor-intensive industry until returns are again equalized. This movement will help to balance the productivity levels between the two industries, and ensure that resources are being efficiently allocated.

When Factors of Production Are Not Fixed (As in the Long