Suppose There Is a Decline in the Demand for the Product

question 158

Multiple Choice

Suppose there is a decline in the demand for the product labor is producing. Furthermore, the price of capital, which is complementary to labor, increases. Thus, the demand for labor

• A)will increase.
• B)will decrease.
• C)may either increase or decrease.
• D)will not change.

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Definitions:

Prime Costs

The combined costs of direct materials and direct labor that are directly attributable to the manufacturing process.

Direct Materials

Materials that are directly consumed in the production of a product and are easily traceable to it.

Cost of Goods Sold

The immediate expenses related to the creation of products sold by a business, which include costs for materials and labor.

Merchandising Firm

A business that purchases goods and resells them at a profit without changing their basic form.