The long-run response to a drop in the wage exceeds the short-run response for all of the following reasons except:
A)it is more difficult to substitute capital for labor in the long run than the short run
B)an increase in labor makes capital more productive,leading to more capital and therefore higher labor productivity
C)the demand for the firm's output is more elastic in the long run
D)technology may change in the long run

Question

Quizplus · Accepted Answer

In the long run, it is actually easier, not more difficult, to substitute capital for labor compared to the short run. This is because firms have more time to adjust their production processes and investment decisions in response to changes in wage rates.

The Long-Run Response to a Drop in the Wage Exceeds