The Input-Substitution Effect Decreases the Labor Input Per Unit of Output

question 144

Multiple Choice

The input-substitution effect decreases the labor input per unit of output while the output effect

• A) decreases the price of the output.
• B) decreases the total output.
• C) increases the price of the output.
• D) increases the total output.

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Definitions:

ROE

Return on Equity, a measure of financial performance calculated by dividing net income by shareholder's equity, indicating how well a company uses investments to generate earnings growth.

Plowback Ratio

The proportion of earnings retained by a company after dividends have been paid, often reinvested in the business for growth.

P/E Ratio

The P/E Ratio (Price-to-Earnings Ratio) is a metric used to value a company by dividing its current share price by its earnings per share, indicating how much investors are willing to pay for each dollar of earnings.

Free Cash Flow

The amount of cash a company generates after accounting for cash outflows to support operations and maintain its capital assets.