The Assumption That a Firm Operates in a Competitive Labor

question 22

Multiple Choice

The assumption that a firm operates in a competitive labor market means that the firm

• A) offers a real wage rate that is indexed for inflation.
• B) faces an upward-sloped marginal cost of labor curve.
• C) faces a downward-sloped marginal cost of labor curve.
• D) faces a constant wage regardless of how much labor it employs.
• E) does not use capital in the production process.

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Definitions:

Inventory Costing

A method used to assign costs to inventory items and determine the cost of goods sold during a period.

Purchase Order

A document issued by a buyer to a seller, specifying the types of products, quantities, and agreed prices for products or services the seller will provide to the buyer.

Inventory

The total amount of goods and materials held by a company that are ready for sale or in the process of being produced.

Perpetual Inventory System

The inventory system in which each purchase and sale of merchandise is recorded in an inventory account.