Question: a. Prepare graphs like those in Exhibit to illustrate the relationships between short-run and long-run labor demand when capital and labor are substitutes in production.

a. Prepare graphs like those in Exhibit to illustrate the relationships between short-run and long-run labor demand when capital and labor are substitutes in production.
Labor Demand in the Short Run and the Long Run

b. In this case, is the short-run labor demand curve more or less elastic than the long-run labor demandcurve?

Wage rate of labor Rental rate of capital W1 Long-run labor demand MRPL MRP MRP, L3 L2 L1 Lo Labor Capital

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