Based on a Cobb-Douglas Production Function and Perfect Capital Mobility

question 5

Multiple Choice

Based on a Cobb-Douglas production function and perfect capital mobility, capital should flow to economies where:

• A)capital is relatively scarce.
• B)capital is relatively abundant.
• C)technological production capabilities are inferior.
• D)labor is relatively scarce.

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Definitions:

Unit Product Cost

The total cost to produce a single unit of product, including direct materials, direct labor, and allocated overhead.

Direct Labor Cost

The expense of labor that can be directly attributed to the production of goods or services.

Net Operating Income

A company's revenue minus its operational direct and indirect costs, excluding taxes and interest.

Net Operating Income

Earnings from a company's regular activities before taxes and interest, used to gauge the company's operational efficiency.