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:

Price Per Unit

The cost assigned to a single unit of a good or service.

Marginal Revenue

The profit derived from the sale of an additional item of a product or service.

Cheese

A dairy product made from curdled or cultured milk that comes in various flavors and textures.

Marginal Revenue Curve

A graphical representation that shows how marginal revenue varies as the quantity of the product sold changes.