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Use the Following to Answer Questions

Question 3

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Use the following to answer questions :
Exhibit: Rental Price of Capital Use the following to answer questions : Exhibit: Rental Price of Capital -(Exhibit: Rental Price of Capital) Based on the graph, if the capital market is initially in equilibrium at A with real rental price R<sub>3</sub>/P and capital stock K<sub>2</sub>, then holding other factors constant, an increase in the quantity of labor employed will move the real rental price of capital to: A) R<sub>1</sub>/P. B) R<sub>2</sub>/P. C) R<sub>4</sub>/P. D) R<sub>5</sub>/P.
-(Exhibit: Rental Price of Capital) Based on the graph, if the capital market is initially in equilibrium at A with real rental price R3/P and capital stock K2, then holding other factors constant, an increase in the quantity of labor employed will move the real rental price of capital to:


A) R1/P.
B) R2/P.
C) R4/P.
D) R5/P.

Correct Answer:

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