As the Price of Labor Increases Relative to the Price

question 20

True/False

As the price of labor increases relative to the price of capital,the firm will move to a more labor-intensive production method to minimize costs.

---

Definitions:

Capital Investment

Money expended by a business to purchase or improve tangible assets like land, factories, or machinery.

Investment Funds

These are pooled funds from various investors used to acquire securities and other investment assets, managed by financial professionals.

Present Value Index

An index computed by dividing the total present value of the net cash flow to be received from a proposed capital investment by the amount to be invested.

Competing Proposals

Proposals or bids from different entities aimed at securing a contract or project, often requiring evaluation to select the most advantageous.