If the Cost of Using Skilled Labor Was Twice the Cost

question 111

Multiple Choice

If the cost of using skilled labor was twice the cost of using unskilled labor, and both were used by a profit-maximizing firm, the firm would adjust the quantity of each type of labor until

• A) the marginal product of each was the same.
• B) twice as much unskilled labor was used.
• C) half as much unskilled labor was used.
• D) the marginal product of skilled labor was twice that of unskilled labor.

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Definitions:

Accounting Cycle

The accounting cycle is a step-by-step process of recording, classifying, and summarizing financial transactions of a business to provide an accurate picture of its financial position and performance.

Adjusting Entries

Documentation in accounting made at the termination of an accounting cycle to allot income and spending to the span in which they factually occurred.

Debit Total

The sum of all debit entries made in an account or ledger over a specific period.

Credit Total

The sum of all credit transactions in an accounting period, representing the amount owed by a business to its creditors.