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 improvement in technology that increases the marginal productivity of capital will move: A)the demand curve from D₂ to D₁. B)the demand curve from D₂ to D₃. C)the supply of capital from K₂ to K₁. D)the supply of capital from K₂ to K₃.

Question

Quizplus · Accepted Answer

The Answer of 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 improvement in technology that increases the marginal productivity of capital will move: A)the demand curve from D₂ to D₁. B)the demand curve from D₂ to D₃. C)the supply of capital from K₂ to K₁. D)the supply of capital from K₂ to K₃.

Exhibit: Rental Price of Capital Based on the Graph