Output Is Produced with Capital and Labor

question 32

Multiple Choice

Output is produced with capital and labor. If the price of capital goes up

• A) the price of output will fall.
• B) output will be increased.
• C) the firm will more labor per unit output.
• D) none of the above will result when the price of capital goes up.

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Definitions:

Downward-Sloping Demand

A market situation in which the quantity demanded of a good or service decreases as its price increases, depicting an inverse relationship between price and demand.

Consumer Surplus

The difference between the total amount that consumers are willing and able to pay for a good or service versus what they actually pay.

Willingness to Pay

The maximum amount an individual or organization is willing to spend to acquire a good or service.

Consumer Surplus

The discrepancy between the financial amount consumers intend to spend on a good or service and the amount they end up spending.