Assume That Capital Is Represented by the Vertical Axis and Labour

question 8

Multiple Choice

Assume that capital is represented by the vertical axis and labour is represented by the horizontal axis. The steeper an isoquant is:

• A) The larger the marginal productivity of labour relative to that of capital.
• B) The greater is the substitutability between capital and labour.
• C) The larger the marginal productivity of capital relative to that of labour.
• D) The greater is the budget available to the firm.

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Definitions:

Accrual Basis

An accounting method that records income and expenses when they are earned or incurred, regardless of when cash is exchanged.

Expenses

Costs incurred by a business or individual in the course of generating revenue, including operational costs and overheads.

Dividends Payable

A liability account on a company's balance sheet representing the amount of declared dividends that have not yet been paid out to shareholders.

Beginning

The starting point or initial stage of an event, process, or time period.