Question: Please also explain why the statement is true or false (b) (10 points) Consider a profit-maximizing firm that sells its output in a perfectly competitive

Please also explain why the statement is true or false

(b) (10 points) Consider a profit-maximizing firm that sells its output in a perfectly competitive mar- ket. The firm's production technology allows it to substitute between capital and labor; however, capital and labor are not perfect substitutes. The firm takes the prices of labor and capital as given. Suppose the price of labor declines. Determine if the following statement is either True or False. The capital to labor ratio declines, but it is possible that the firm uses more units of capital than it employed prior to the decline in the price of labor

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