Two Firms with Identical Capital Intensity Ratios Are Generating the Same

question 43

True/False

Two firms with identical capital intensity ratios are generating the same amount of sales.However, Firm A is operating at full capacity, while Firm B is operating below capacity.If the two firms expect the same growth in sales during the next period, then Firm A is likely to need more additional funds than Firm B, other things held constant.

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Definitions:

Opportunity Cost

The benefit that is missed or given up when choosing one alternative over another.

Hour

A unit of time equal to 60 minutes.

Opportunity Cost

Skipping over the possibility of gain from multiple options by deciding on a single one.

Opportunity Cost

The cost of choosing one option over alternative uses of resources or opportunities.