Land and Capital Are Substitutes

question 43

Multiple Choice

Land and capital are substitutes.If rent goes up and the amount of capital used goes up,we can assume that the

• A)output effect outweighed the substitution effect.
• B)the substitution effect outweighed the output effect.
• C)the substitution effect and the output effect canceled each other out.
• D)there is no way to determine the relative weights of the substitution effect and the output effect.

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Definitions:

LIFO

Last-In, First-Out, an inventory valuation method where the most recently acquired items are recorded as sold first.

Retail Inventory Method

An accounting method used to estimate inventory cost for retail businesses by applying a constant gross margin percentage.

Gross Profit Ratio

A financial metric that measures a company's gross profit as a percentage of its revenues, indicating efficiency in using labor and supplies.

Net Realizable Value

The estimated selling price of an item in the ordinary course of business minus any cost associated with the sale or disposal of the item.