What Happens When Technological Advance Makes Available a New Highly

question 178

Multiple Choice

What happens when technological advance makes available a new highly productive capital good for which MP/P is greater than that of labor for which it is a substitute resource?

• A)Labor will replace the new capital because labor is now cheaper.
• B)The new capital will replace labor because it reduces the firms' costs.
• C)More of both the new capital and labor will be used because firms are more productive.
• D)Less of both the new capital and labor will be used because the firms do not know how to use the new technology.

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Definitions:

Barriers to Entry

Obstacles that prevent new competitors from easily entering an industry or area of business.

Governmental Prohibitions

Regulations or laws imposed by a government to forbid specific activities, products, or services within its jurisdiction.

Strong-Armed Tactics

Aggressive or forceful strategies used to influence or control outcomes, often in a business or negotiation context.

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Established methods of conducting business activities, including management, marketing, and operational procedures.