If Labor and Capital Are Substitute Resources in Production, an Increase

question 21

Multiple Choice

If labor and capital are substitute resources in production, an increase in the price of capital will

• A)increase the wage rate and decrease the number of workers hired.
• B)decrease the wage rate and increase the number of workers hired.
• C)decrease the wage rate and decrease the number of workers hired.
• D)increase the wage rate and increase the number of workers hired.

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Definitions:

Acquisition-Date Fair Value

The estimated market value of an asset or liability at the date a transaction is completed or an acquisition is made.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest of shareholders.

Unamortized Patent

A patent that has not yet been fully written off through amortization in a company's financial statements, representing an intangible asset still holding value.

Land Account

An account used in accounting to record the cost of land owned by a company. It includes the purchase price and any additional costs incurred to prepare the land for use.