If the Price of an Input Falls,a Firm Would Increase

question 11

Multiple Choice

If the price of an input falls,a firm would increase the use of that input for two reasons:

• A)The input is now more productive,and the firm can substitute this input for other relatively more expensive inputs.
• B)The input is now more productive,and overall production costs are now lower,meaning a firm may choose to increase production.
• C)Overall production costs are now lower and the firm can substitute this input for other relatively more expensive inputs.
• D)Overall production costs are now lower and the firm will have more of other inputs to use with the one in question.

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Definitions:

Accounts Payable

Liabilities owed by a business to its suppliers or creditors for goods or services received but not yet paid for.

T-account

A graphical representation of a general ledger account that outlines the effects of transactions on account balances.

Debit

An accounting entry that results in either an increase in assets or a decrease in liabilities on a company's balance sheet.

Credit

A financial agreement where a borrower receives something of value now and agrees to repay the lender at a later date, often with interest.