Assume the price of capital doubles and as a result firms


Assume the price of capital doubles and, as a result, firms make no change in the relative quantities of capital and labor they employ. This implies that:

labor is not readily substitutable for capital.

the law of diminishing returns is not applicable.

the firms are producing an inferior good.

the demand for capital is highly price elastic.

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Business Economics: Assume the price of capital doubles and as a result firms
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