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Solve clearly New technological advances have made it cheaper to rent capital. The cross-elasticity of factor demand is 2/3 and the capital elasticity of demand

Solve clearly

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New technological advances have made it cheaper to rent capital. The cross-elasticity of factor demand is 2/3 and the capital elasticity of demand is -1/2. A. Use the elasticities to solve for C3 and EA in the table below. Show your work. B. In one sentence each, describe how the scale and substitution effects work when the price of capital decreases. C. In this example, are labor and capital substitutes or complements? Why? Rental . Labor rate of Capital _ hours capital m

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