If the Price of Labor Falls

Multiple Choice

If the price of labor falls,

A) we can conclude that the demand for capital will always decrease because only the input-substitution effect is relevant.
B) we can conclude that the demand for capital will always increase because only the output effect is relevant.
C) the change in the demand for capital cannot be predicted because the input-substitution effect and output effect work in opposite directions.
D) the demand for capital will be unaffected, because only a change in the price of capital would change the demand for capital.