Which of the Following Statements Correctly Identifies a Difference Between

question 9

Multiple Choice

Which of the following statements correctly identifies a difference between labor and capital?

• A) Capital can be rented or owned by a firm, but labor cannot be owned.
• B) Labor can be rented or owned by a firm, but capital cannot be owned.
• C) Labor is hired until the marginal product of labor equals the price of labor, whereas capital is hired until the average product of capital equals the price of capital.
• D) Labor is hired until the average product of labor equals the price of labor, whereas capital is hired until the marginal product of capital equals the price of capital.

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Definitions:

Regular Payments

Periodic payments made consistently over time, such as monthly mortgage or loan repayments, or dividend payouts to shareholders.

Capitalized

Expenses or costs that are added to the value of an asset and expensed over time through depreciation or amortization, rather than immediately.

Perpetuity

An annuity that pays a fixed amount of money for an infinite amount of time.

Amortized

The process of gradually paying off a debt over time in regular installments of interest and principal sufficient to repay the loan fully by its maturity date.