If a Firm's MPK Is Below Its User Cost of Capital,it

question 61

Multiple Choice

If a firm's MPK is below its user cost of capital,it is employing too ________ capital and its profit is ________ in the long run.

• A)little,above what it will be
• B)little,below what it could be
• C)much,above what it will be
• D)much,below what it could be

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Definitions:

Direct Labor Rate Variance

The difference between the actual cost of direct labor and the expected (or standard) cost, often analyzed to manage and control production costs.

Time Variance

The difference between the planned amount of time to complete a project or task and the actual time taken.

Total Cost Variance

The difference between the actual cost and the standard or expected cost of goods or services produced over a given period.

Standard Cost

A predetermined cost of manufacturing a product or providing a service, used for budgetary and inventory purposes.