If a technological change makes it easier to substitute capital for labour, the demand curve for labour
A) shifts parallel to the left.
B) is not affected.
C) becomes more inelastic.
D) becomes more elastic.
E) shifts parallel to the right.

Question

Quizplus · Accepted Answer

When it becomes easier to substitute capital for labor, the demand for labor becomes more elastic because firms can more easily replace labor with capital in response to wage changes.

If a Technological Change Makes It Easier to Substitute Capital