Which of the Following Statements Is True

question 21

Multiple Choice

Which of the following statements is true?

• A) If MFC_L < MRP_L the firm should hire more labor.
• B) If the MFC_L > MRP_L the firm should hire more labor.
• C) If the MFC_L = MRP_L the firm should hire more labor.
• D) If MFC_L > 0, the firm should shut down.

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Definitions:

Operating Income

EBIT, which stands for Earnings Before Interest and Taxes, indicates a firm's profit derived specifically from its primary business activities.

Investment Turnover

A measure of a company's efficiency in using its assets to generate sales revenue; calculated as sales divided by the investment in assets.

Return on Investments

A metric for assessing how effectively an investment generates returns in comparison to its expense.

Controllable Revenues

Revenues over which a manager or department has influence or direct control, often used in performance evaluation and budgeting.