If the Costs of Labor and Capital Increase in the Same

question 52

Multiple Choice

If the costs of labor and capital increase in the same proportion,the isocost line will

• A) stay the same.
• B) shift outward in a parallel fashion.
• C) rotate inward around the point where only capital is employed in production.
• D) shift inward in a parallel fashion.

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Definitions:

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overheads, payroll, taxation, and interest payments.

Periodic Inventory System

An inventory accounting system where stock levels are updated at regular intervals, not continuously.

Gross Profit

Gross profit is the difference between sales revenue and the cost of goods sold, indicating how efficiently a company is producing or sourcing its products.

Income Statement

A financial statement that reports a company's financial performance over a specific accounting period, showing revenue, expenses, and net income.