If a Firm Fired One Worker and Lost 12 Units

question 124

Multiple Choice

If a firm fired one worker and lost 12 units of production and decides to add one more unit of capital, then to remain on the same isoquant what must be TRUE?

• A)The MPK of the next unit of capital added equals 12.
• B)The firm must force the other workers to work more.
• C)The firm will experience a decline in output.
• D)The marginal rate of technical substitution is greater than 12.

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Definitions:

Treasury Stock

Treasury stock refers to shares that were issued and later reacquired by the issuing corporation, not considered while calculating earnings per share or dividends.

Stated Value

The value assigned to no-par value stock by the company's board of directors, which becomes the legal capital per share that must be retained in the business.

Net Loss

The amount by which expenses exceed revenues in a given period, resulting in a negative net income.

Par Value

The nominal or face value of a stock or bond, representing the value stated in the corporate charter or on the certificate.