A Vertical Supply Curve of a Factor Indicates That

question 195

Multiple Choice

A vertical supply curve of a factor indicates that

• A)the demand for the factor will vary directly with the price of the factor.
• B)the supply of the factor is perfectly elastic.
• C)the factor has zero opportunity cost.
• D)a government restriction has been imposed on the purchase of the factor.

---

Definitions:

Retained Earnings

Profits generated by a company that are not distributed to shareholders as dividends but are instead reinvested in the business or held for future use.

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over its current liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating its short-term liquidity.

Current Assets

Current assets are short-term assets that are expected to be converted into cash, sold, or consumed within one year or within the business's operating cycle, whichever is longer.