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In the Specific Factors Model,a 5% Decrease in the Price

question 62

Multiple Choice

In the specific factors model,a 5% decrease in the price of food accompanied by a 5% decrease in the price of cloth will cause ________ in the welfare of labor,________ in the welfare of the fixed factor in the production of food,and ________ in the welfare of the fixed factor in the production of cloth.


Definitions:

Net Income

The net earnings of a business once all costs and taxes are subtracted from its total income.

Variable Costing

An accounting method that only includes variable production costs (direct materials, direct labor, and variable manufacturing overhead) in product costs, with fixed overhead treated as a period expense.

Absorption Costing

An accounting method that includes all manufacturing costs (fixed and variable) in the cost of a product.

Net Income

Net income is the total profit of a company after all expenses, taxes, and costs have been deducted from total revenue, often referred to as the bottom line.

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