Assume That Constant Returns to Scale Exists and That N

question 7

Multiple Choice

Assume that constant returns to scale exists and that N and K both decrease by 3%.Given this information,we know that

• A)output (Y)will decrease 6%.
• B)Y will decrease by 3%.
• C)Y will decrease by less than 3%.
• D)the capital-labor ratio (K / N)will decrease.

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Definitions:

Time-Driven Activity-Based Costing

An accounting method that assigns costs to products based on the estimated amount of time activities take and the cost of performing those activities.

Customer Cost Analysis

The process of examining and evaluating the costs associated with acquiring and supporting customers to determine profitability.

Customer Support Department

A division within a company that deals with customer inquiries, issues, and assistance requirements.

Time-Driven Activity-Based Costing

A method of costing that assigns costs to products or services based on the actual time taken to perform specific activities.