Other Things Being Equal, a Technological Change That Raises the Value

question 376

Multiple Choice

Other things being equal, a technological change that raises the value of marginal product of capital raises the rental rate of capital because the

• A) supply curve of capital shifts leftward.
• B) supply curve of capital shifts rightward.
• C) demand curve for capital shifts rightward.
• D) demand curve for capital shifts leftward.

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Definitions:

Selling Price

The amount of money charged for a product or service, or the sum the consumer believes it is worth.

Absorption Costing

A pricing methodology that sums up all production-related costs, from raw materials and labor to both flexible and fixed overheads, in calculating the expense of a product.

Cost-plus Pricing

A pricing approach that sets the selling price by adding a predetermined markup to the cost per unit of a product.

Return on Investment

A measure of the profitability and efficiency of an investment, calculated as net profit divided by the cost of the investment.