Suppose a Sailboat Factory and a Fishing Boat Factory Exist

question 31

Multiple Choice

Suppose a sailboat factory and a fishing boat factory exist in the same town. Employees at both factories have the same skills and are initially paid the same wage rate. If the sailboat manufacturer increases the hourly wage paid to his employees, then the

• A)demand for sailboats will increase and the supply will decrease.
• B)quantity supplied of labor at the sailboat factory will increase.
• C)supply of labor at the fishing boat factory will increase.
• D)demand for sailboats will decrease and the supply will increase.

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Definitions:

Capital Base

The amount of capital that a company or financial institution has available for conducting its operations, typically consisting of equity and debt.

Quality Of Earnings

An assessment of how accurately a company's reported income reflects its true earning capacity, and if it's indicative of its future financial performance.

GAAP

Generally Accepted Accounting Principles, the standard framework of guidelines for financial accounting used in any given jurisdiction.

Net Cash

The amount of cash remaining after all operating expenses, investments, and financial obligations have been accounted for.