The Presence of Capital Rental Markets Gives Firms

question 152

Multiple Choice

The presence of capital rental markets gives firms:

• A) the ability to hire more labor in periods of high demand by keeping capital costs fixed.
• B) reduced flexibility in substituting among various labor and capital inputs.
• C) the ability to hire more capital in periods of high demand by keeping capital costs fixed.
• D) the flexibility to adjust capital usage to output levels, making capital costs variable.

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Definitions:

Flow of Costs

The movement and assignment of costs through a company's production processes to its products or services.

Process Costing System

Accounting methodology used for homogeneous products, calculating costs at each stage of the manufacturing process.

Mass-Produced

Items or products manufactured in large quantities using automated processes and standardized components, allowing for economies of scale.

Continuous Fashion

This typically means ongoing or uninterrupted, often used in contexts like operations or processes that do not stop or pause.