A Change in an Input Price Will Alter Both Production

question 136

Multiple Choice

A change in an input price will alter both production costs and the profit-maximizing output. Thus, a decline in the price of capital will reduce production costs, increase the profit-maximizing output, and thereby increase the demand for labor. This describes the

• A)output effect.
• B)substitution effect.
• C)idea of derived demand.
• D)law of diminishing returns.

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Definitions:

Henry Ford

An American industrialist and founder of the Ford Motor Company who is credited with popularizing the assembly line technique of mass production.

Vision

The ability to think about or plan the future with imagination or wisdom, often related to the goals or direction of an organization or individual.

Moving Assembly Line

A production process that breaks down a complex job into a series of smaller tasks, which are completed by a sequence of workers or machines moving the product along a line.

Achievement-oriented

A focus and drive on the accomplishment of specific goals or standards, often in the context of work or competitive environments.