As the Quantity of Labour Employed by a Firm Decreases

question 1

Multiple Choice

As the quantity of labour employed by a firm decreases, labour's _______ increases.

• A) average cost
• B) marginal revenue
• C) marginal cost
• D) value of marginal product

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Definitions:

Inventory Cost

The total cost associated with holding or storing inventory, including warehousing, insurance, depreciation, obsolescence, and opportunity costs.

Processing Cost

The expenses incurred during the transformation of raw materials into finished products, including labor, materials, and overhead.

Lead Time Demand

Lead time demand represents the total quantity of a product that is demanded by the market during the period it takes to replenish inventory, critical for effective inventory management.

Safety Inventory

Additional stock that is maintained to act as a safeguard against supply and demand uncertainties, ensuring product availability.