The Rate at Which a Firm Is Able to Substitute

question 320

Multiple Choice

The rate at which a firm is able to substitute one input for another while keeping the level of output constant is called the

• A)opportunity cost of inputs.
• B)marginal rate of technical substitution.
• C)input trade-off rate.
• D)isoquant substitution rate.

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Definitions:

Depreciation

The systematic allocation of the cost of a tangible asset over its useful life, reflecting the decrease in value over time.

Indirect Method

A technique used in cash flow statement preparation that adjusts net income for changes in balance sheet accounts to calculate operating cash flow.

Operating Activities

Cash flow actions related to the day-to-day operations of a business, such as receiving cash from customers and paying suppliers.

Direct Method

An allocation method that directly assigns service department costs to producing departments without any intermediate allocations.