The Price Paid by a Firm for a Factor of Production

question 183

Multiple Choice

The price paid by a firm for a factor of production in a perfectly competitive market:

• A) increases with the quantity of input demanded.
• B) decreases with the quantity of input demanded.
• C) is equal to the market price of the factor.
• D) is less than the market price of the factor.

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Definitions:

Procurement Activity

The process undertaken by businesses to acquire goods or services, including planning, selection, and purchasing, to meet its requirements.

Activity Rate

A measure used in cost accounting to assign overhead costs to products or services, based on the amount of activity (such as machine hours or labor hours) consumed.

Activity Cost Pool

A categorization in cost accounting that aggregates costs incurred for a specific activity, aiding in more accurate product or service costing.

Product Development

The creation of new products or improvements to existing products to meet customer needs or market opportunities.