A Firm Practices Input Substitution When It

question 81

Multiple Choice

A firm practices input substitution when it

• A)retrains Joe the welder as a painter and Pat the painter as a welder.
• B)buys extra machines for its workers to use.
• C)allows fixed cost to become variable.
• D)replaces unskilled labor with automated machinery.

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Definitions:

Net Income

The total profit of a company after all expenses and taxes have been subtracted from total revenue.

Crossover Rate

The crossover rate refers to the point at which two different projects have the same net present value (NPV), used in capital budgeting to compare the desirability of investments or projects.

Mutually Exclusive

Situations, events, or decisions that cannot occur or be undertaken simultaneously—if one happens, the other cannot.

Projects

Initiatives or plans undertaken to achieve specific objectives, which can be either short-term or long-term in nature.