Suppose Labor and Capital Are the Only Two Resources Used

question 153

Multiple Choice

Suppose labor and capital are the only two resources used for production. In the long run:

• A) both capital and labor can move freely between sectors.
• B) only labor can move between sectors.
• C) only capital can move between sectors.
• D) both capital and labor are blocked from moving between sectors.

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Definitions:

Inventory Turnover

A proportion demonstrating the rate at which a company's goods are sold and then replenished over an interval.

Cost of Goods Sold

Direct costs tied to the process of producing goods a company puts up for sale, inclusive of labor and materials.

Average Inventory

A means of measuring the approximate amount of inventory a company holds over a certain period, aiming to balance holding costs against stockout risks.

Gross Profit

The difference between sales revenue and the cost of goods sold before deducting overheads, interest, tax, and other expenses.