In the Short Run,the Cost of ________ Is Variable,whereas the Cost

question 109

Multiple Choice

In the short run,the cost of ________ is variable,whereas the cost of ________ is fixed.

• A) capital; labor
• B) electricity; wages
• C) capital; raw materials
• D) labor; capital
• E) raw materials; labor

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Definitions:

Half-Year Convention

The half-year convention is a tax and accounting principle that allows for depreciation of assets to be calculated as if they had been in service for half a year, regardless of when they were actually acquired during the fiscal year.

Corporate Tax Rate

The share of a company's earnings required to be paid to the government as tax.

Straight Line

A method of calculating depreciation of an asset, where the asset's cost is evenly spread over its useful life.

Market Value

The current price at which an asset or service can be bought or sold in the marketplace.