Although Capital Is a Variable Factor in the Long Run

question 79

Multiple Choice

Although capital is a variable factor in the long run, once chosen it becomes a fixed factor for a long time. A profit- maximizing firm must therefore select a method of production that is

• A) currently economically efficient.
• B) labour intensive, as labour is always a variable factor.
• C) currently economically efficient and sufficiently flexible to adapt to changing factor prices over time.
• D) technologically advanced beyond anything currently used.
• E) adaptable to wide ranges of output over time.

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Definitions:

Progressive

A term often used in the context of taxation or political ideology, indicating policies or stances that aim to redistribute resources from the more affluent to the less affluent.

Income Tax

Tax levied by a government directly on income, especially an annual tax on personal income.

Work and Leisure

Describes the balance between the time and effort spent in gainful employment and the time spent in recreational activities or rest.

Second Best

Refers to a situation wherein the optimal condition cannot be achieved, and the best possible alternative under the given restrictions is adopted.