Answer:
Capital budgeting is the process "of making capital expenditure decisions"
Explanation:
Capital budgeting is a planning process employed by a firm's management to evaluate if embarking on long-term investments (like purchase of a new machinery, replacement of old non-current assets, new product line, etc) are viable and profitable.
Decisions made by management must be informed decisions and one of the ways in which an investment decision can be evaluated to check if it is worthwhile is the capital budgeting process
Capital budgeting is the process of making capital expenditure decisions.
Capital budgeting is the process of making capital expenditure decisions. It involves analyzing and evaluating potential investment opportunities to determine which projects to undertake. This process typically includes estimating cash flows, assessing the risk associated with the projects, and calculating measures such as net present value (NPV) and internal rate of return (IRR) to help in decision-making.
Learn more about Capital budgeting here:https://brainly.com/question/34912837
#SPJ6
Muffins-2-Go buys a truck from Street Vehicles, Inc., under a contract signed by Riley, Muffins-2-Go’s president, making him personally liable if Muffins-2-Go does not pay the loan. Riley is____________.a. a guarantor.b. a surety.c. a co-surety.d. a co-creditor.
Answer:
The correct answer is a. a guarantor.
Explanation:
In the case of a new product, the person who offers / sells a product must respond to defects that are present within a minimum of 2 years, from the date on which the product is delivered. In other words, the buyer has the assurance that, for two years, he will be able to have the company's technical service, to deal with any possible damages that may arise.
In the case of new products, the company that manufactures it is the guarantor, which will be responsible for arranging or returning the money to the buyer, if the product does not respond to the provisions of the contract of sale.
Factors that influence global climate patterns include all of the following except _________.
Answer:
Deep ocean currents
Explanation:
Deep ocean currents do not affect global climate patterns. Deep ocean currents are driven by thickness and temperature inclinations. Since the development of profound water in sea bowls is mainly caused by thickness driven powers and gravity, Deep Ocean currents into deep sea plates at high scopes where the temperatures are sufficiently cold to make the thickness increment.
Which of the following budgets usually shows separate sections for fixed and variable costs?A. Direct materials and manufacturing overhead budget.B. Manufacturing overhead budget and production budget.C. Operating expenses budget and manufacturing overhead budget.D. Production budget and manufacturing overhead budget.
The budgets that show separate sections for fixed and variable costs are the Manufacturing Overhead Budget and the Operating Expenses Budget.
The budget that typically shows separate sections for fixed and variable costs is the Manufacturing Overhead Budget and the Operating Expenses Budget. Fixed costs are expenditures that do not change regardless of the level of production, such as leases, salaries of top management, and costs of machinery. Variable costs, on the other hand, change with the level of production and include costs for raw materials and utilities.
In an Operating Expenses Budget, businesses plan for expenses that do not directly tie to the production of goods, such as marketing costs and administrative salaries. Both fixed and variable components may be included. Similarly, the Manufacturing Overhead Budget includes fixed costs, often referred to as overhead, and can also include variable costs related to the production process.
Therefore, the correct answer to the student's question is C. Operating Expenses Budget and Manufacturing Overhead Budget.
Kelly purchases a house from John. She borrows $75,000 from First City Bank that, along with her $25,000 down payment, equals the $100,000 purchase price of the home. Who has an insurable interest in this home?
Answer:
Kelly and First city bank
Explanation:
The insurable interest means the party has the right to insured his /her property. It involves the financial interest in the property without which the insurable interest can't be involved.
In the given scenario, the Kelly purchase a house from John for $100,000. For which she borrows $75,000 from the city bank and $25,000 down payment. In this two-party have a financial interest in the property i.e Kelly and the first city bank
According to the consumption function,
what variables determine aggregate spending on consumer goods and services?
A. Consumer spending depends on disposable income, the real interest rate, and other variables such as consumers' optimism and wealth.
B. Consumer spending depends on disposable income, the real interest rate, and the export-to-import ratio.
C. Consumer spending depends only on disposable income and the real interest rate.
D. None of the above are correct.
Answer:
The correct answer is option A.
Explanation:
Consumer spending refers to the expenditure of households on consumer goods and services. The aggregate consumer spending depends upon the disposable income of the consumer, the real interest rate, consumer optimism and wealth.
Consumer spending is positively related to disposable income, consumer optimism and wealth. The real interest rate is inversely related to consumer spending.
Which one of the following is not a method used by companies to accelerate cash receipts? Offering discounts for early payment Accepting national credit cards for customer purchases Writing off receivables Selling receivables to a factor
Answer:
Writing off receivables
Explanation:.
Receivables represent the amount of money that the company can collect from its debtors. Writing of receivables means that the company is not able to collect its debt, and therefore will consider them as bad debt or uncollectible debt for tax purposes.
When evaluating advertising results, what post testing technique can be used to measure consumer's beliefs or feelings about a product before and after exposure to the ad?A. estimonials.B. Attitudinal measures.C. Unaided recall.D. Fear appeals.E. Aided recall.
Answer:
The correct answer is B that is Attitudinal measures.
Explanation:
Attitudinal measures is the one which evaluates the importance of the consumer places on the specific attributes of the services or the products.
It is done through surveys and created to measure how consumer feels regarding something.
In order to evaluate the advertising results, the attitudinal measures technique could be used for measuring the feelings and the beliefs of a product after or before the advertisement.
"Nanci purchases all of the assets of Michael's Security Service for $200,000. The assets are as follows: Asset Adjusted Basis Fair Market Value Inventory $25,000 $50,000 Equipment 60,000 40,000 Supplies 20,000 20,000 Building 80,000 95,000 Land 10,000 20,000 $195,000 $225,000 What is Nanci's basis in the equipment?"
a. $17,776
b. $35,556
c. $40,000
d. $60,000
e. $61,538
Answer:
option (b) $35,556
Explanation:
Given:
Cost of purchase of assets = $200,000
Asset Adjusted Basis Fair Market Value
Inventory $25,000 $50,000
Equipment $60,000 $40,000
Supplies $20,000 $20,000
Building $80,000 $95,000
Land $10,000 $20,000
Total $195,000 $225,000
Now,
since, fair market value is greater than Basis,
Percentage FMV on Equipment =[tex]\frac{\textup{FMV for equipment}}{\textup{Total FMV}}\times100\%[/tex]
⇒ Percentage FMV on Equipment = [tex]\frac{\$40,000}{\textup{225,000}}\times100\%[/tex]
= 17.77%
thus,
Nanci's basis in the equipment = Percentage FMV × Assets
= 17.77% × $200,000
= $35,555.56 ≈ $35,556
Hence,
The correct answer is option (b) $35,556
Abstracting from inflation, leverage enables investors to specialize in stocks or debt instruments according to their level of information about a firm’s prospects and/or their degree of risk aversion. In particular, stocks will tend to be held by investors who are
Answer:
The correct answer is more informed and more risk-averse.
Explanation:
Financial leverage is simply using debt to finance an operation. As simple as that. That is, instead of conducting an operation with own funds, it will be done with own funds and a credit. The main advantage is that you can multiply profitability and the main drawback is that the operation does not go well and ends up being insolvent.
One path for achieving self-actualization was through the attainment of __________.
a. gratification of the id
b. peak experiences
c. desired reinforcers
d. gratification of the superego
Answer:
b. peak experiences
Explanation:
One of the most important concepts in organizational psychology is Maslow's hierarchy of needs. The highest level in the pyramid (visual representation of the hierarchy) belongs to the self-actualization needs, coming after physiological, safety, social belonging and self-esteem needs, in that specific order.
Given that self-actualization is the highest level of psychological development, it is associated with the attainment of peak experiences, which are unique for each individual, but always represent an excited mental state during the experiences, events, activities when the individual reaches full potential. It is synonymous with the flow state, a nearly euphoric stage when we engage with activities bringing us nearer to reaching our ultimate goals (ambitious business goals, innovating something, creating a piece of art...).
Which type of transaction refers to a flow of MONEY through the economy?A)Individuals spend money to purchase resources from factor markets.B)Money is used to purchase goods and services in the product markets.C)Businesses pay for goods purchased in the product markets with money.D)Money is used to purchase productive resources in the product markets.
Answer:
B) Money is used to purchase goods and services in the product markets.
Answer: B
Explanation:
UsaTestPrep
The "decision model that computes the difference between the present value of the investment's net cash inflows, using a desired rate of return, and the cost of the initial investment" is best described by which of the following terms?
A) Accounting rate of return
B) Discount rate
C) Net present value
D) Internal rate of return
Answer:
C) Net present value
Explanation:
In this method, the initial investment is subtracted from the discounted present value cash inflows. If the amount comes in positive than the project is beneficial for the company otherwise not.
And, the internal rate of return is that return in which the Net present value come zero.
The average rate of return shows a ratio between the average net profit and the average investment.
In mathematically,
Net present value = Present value of all yearly cash inflows after applying discount factor - initial investment
Lamey Headstones increases its annual dividend by 1.5 percent annually. The stock sells for $28.40 a share at a required return of 14 percent. What is the amount of the last dividend (the most recent dividend - D0) this company paid?
Answer:
$3.50
Explanation:
Use dividend discount model to solve this question;
[tex]P0 = \frac{D0(1+g)}{r-g}[/tex]
where P0 = Current price
D0 = most recent dividend
g = dividend growth rate
[tex]28.40 = \frac{D0(1.015)}{0.14-0.015} \\ \\ =28.40(0.125) =1.015 D0[/tex]
Divide both sides by 1.015 to solve for D0;
3.55 / 1.015 = D0
D0 = 3.498
Therefore, the last dividend was $3.50
Final answer:
To find the most recent dividend paid by Lamey Headstones, the dividend discount model is used by inserting the given values into the rearranged formula to solve for D0, leading to the calculation of the dividend amount.
Explanation:
The question asks for the calculation of the most recent dividend paid by Lamey Headstones, which has an annual dividend increase of 1.5 percent and sells for $28.40 a share with a required return of 14 percent. To solve this, we use the dividend discount model for a stock with constant growth, given by the formula P = D0(1+g)/(r-g), where P is the current stock price, D0 is the most recent dividend paid, g is the growth rate, and r is the required rate of return. Rearranging the formula to solve for D0, we get D0 = P(r-g)/(1+g).
In this case, P = $28.40, r = 14% or 0.14, and g = 1.5% or 0.015. Substituting these values, we get D0 = $28.40(0.14 - 0.015) / (1 + 0.015). Calculating this gives us the value of D0, which is the amount of the last dividend paid by the company.
Lisa always wondered why the shower in the upstairs bathroom suffered from low flow. She finally determined that the filters in the water softener had not been changed in a decade. She decided to install a larger water softener and maintain it regularly.
The installation of the larger water softener corresponds to which step in the TOC process?
A. Exploit the constraint.
B. Subordinate everything to the constraint.
C. Elevate the constraint.
D. Identify the constraint.
The installation of the larger water softener corresponds to elevate the constraint in the TOC process.
Option C
Explanation:
An idea supported by Eliyahu Goldratt, which is the hypothetical base of inventory network the executives. TOC is a model that clarifies the effect on benefit from basic leadership by a store network regarding time. TOC is likewise a technique for overseeing bottlenecks.
The "TOC (Theory of Constraints)" created by Eliyahu Goldratt is a technique for expanding throughput by overseeing "requirements" (bottlenecks). It is an idea that fills in as the hypothetical base of production network the executives and a model that clarifies the relationship of factors in business regarding how income based benefit is influenced by basic leadership in the inventory network concerning business forms as far as time.
As a figurative clarification, how about we utilize the case of "a gathering climbing", to depict the administration of improving throughput by utilizing the TOC .
The installation of a larger water softener by Lisa to improve water flow is an example of 'Elevate the constraint' in the TOC process, as she is improving the system's capacity to handle the identified constraint.
Explanation:The installation of the larger water softener corresponds to the 'Elevate the constraint' step in the Theory of Constraints (TOC) process. Lisa identified the constraint (low water flow due to water softener's filters) and took steps to relieve the constraint by replacing the existing unit with a larger, more efficient one, thus addressing the root cause of the problem.
Water softeners play a crucial role by removing calcium, magnesium, and certain other metal cations in hard water. The ion exchange process is one of the most common methods used in water softeners, where hard water ions such as Ca︀ and Mg︀ are replaced with more acceptable ions like Na︀. By installing a larger water softener and maintaining it regularly, Lisa is ensuring that water flow issues due to accumulation of scale and hard water minerals are minimized, leading to improved water quality and flow rate.
Suppose a country reduces restrictions on how many hours people can work. If reducing these restrictions increase the total number of hours worked in the economy, but all other factors that determine output are held fixed, then
a) productivity and output both rise.
b) productivity rises and output falls.
c) productivity falls and output rises.
d) productivity and output fall.
Answer:
The correct answer is option c.
Explanation:
If the restrictions on working hours are removed such that keeping other factors constant, the total number of hours worked increases. This will cause the total output to increase.
But the workers will not be able to work efficiently for longer hours. This will cause productivity to decline.
This happens because working for long hours will make the workers tired. Their health is negatively impacted so their productivity will decline.
Final answer:
If a country reduces restrictions on how many hours people can work and this leads to an increase in the total number of hours worked, then productivity falls and output rises.
Explanation:
If a country reduces restrictions on how many hours people can work and this leads to an increase in the total number of hours worked in the economy, then the correct answer is option c) productivity falls and output rises.
When restrictions on working hours are reduced, people may choose to work longer hours. However, this does not necessarily mean that productivity will increase. In fact, when people work longer hours without breaks and proper rest, their productivity can actually decrease. So, while the total output may rise due to more hours being worked, the productivity per hour worked may decline.
For example, if workers are only allowed to work 8 hours a day, but the restrictions are reduced and they are now allowed to work 12 hours a day, they may become tired and less focused during the additional hours, which can lead to a decrease in their productivity.
Lemon N' Honey is a juice manufacturing company in the United States. It exports its products to Australia, licenses to China, has a joint ownership venture in France, and owns a subsidiary in Brazil. The firm will most likely need to create a(n) ________ to handle all its worldwide activities.
a. export departmentb. international divisionc. value delivery networkd. domestic divisione. domestic market
Answer:
international division
Explanation:
In a functional organization structure, a company is divided into small units based on the roles they perform. For example, a company may have marketing, finance, It and human resources division. The divisions may also be referred to as departments.
Divisions allow for more efficiency as employees with shared skills and knowledge are put together to perform familiar tasks. By creating an international division, Lenon N' Honey will be able to assign specialized employees the duty of in managing its foreign business. The international division will focus on ensuring that the overseas operations are achieving their objectives.
Which of the following is a problem that arises in a health insurance market?
There exists a fierce competition between the insurance providers.
There are a large number of buyers of various insurance programs.
A disproportionate number of high-risk individuals are attracted to buy insurance.
Only risk-averse individuals buy insurance.
Answer: The correct answer is "A disproportionate number of high-risk individuals are attracted to buy insurance.".
Explanation: A disproportionate number of high-risk individuals are attracted to buy insurance is a problem that arises in a health insurance market. Due to the greater risk, many insurers choose not to allow these individuals to hire these policies, and those that do offer these products do so with a higher premium than others.
Which NIMS Management Characteristic helps to eliminate confusion caused by conflicting instructions? A. Chain of Command and Unity of Command.B. Management by Objectives.C. Accountability.D. Information and Intelligence Management
Answer: Option A
Explanation: In simple words, chain command refers to the hierarchy of authority established in the organisation so that there will be clear line of instructions in the company.
Such chain involves executive managers on top levels while the janitor on the lower level. It also establishes the flow of communication that will run in the organisation whether vertical or horizontal.
Hence we can conclude that the correct option is A.
The major shortcoming of a barter economy is A. the requirement of specialization and exchange. B. that goods and services are not traded. C. that money loses value from inflation. D. the requirement of a double coincidence of wants.
Answer:
D) The requirement of a double coincidence of wants.
The major shortcoming of a barter economy is the requirement of a double coincidence of wants. Option (d) is correct.
A barter economy is a cashless economic system where goods and services are exchanged at agreed-upon prices. One of the earliest forms of economy is barter, which predates both monetary systems and written history. Barter may be used effectively in practically any industry.
The three drawbacks of the barter system are as follows: Lack of two desires that coincide. It indicates that in order to buy and sell each other's goods, both sides must agree. ii It is difficult to easily value every item. There are some products that simply cannot be split.
Learn more about barter economy, here;
https://brainly.com/question/30088943
#SPJ6
The project team working on the XK11 could not meet its deadline and was given an extension. When that same team was assigned the XK12, it was given a longer schedule to match those adjustments. However, the project team working on the YK11 completed the project three weeks ahead of schedule. What that team was assigned the YK12, it was given a shorter schedule. The members of the YK12 team are intentionally working slower on this project, and refusing to work any late hours, so that they can get a longer schedule the next time. The control system at this organization suffers from.
Answer:
Rewards for inefficiency
Explanation:
Rewards for inefficiency refers to simply rewarding an employee or group of employees for not doing their work properly. In this case, the team that was working on project XK11 is inefficient and they are simply lazy or bad at what they do, and instead of taking actions to correct this bad behavior, management rewards them by giving them more time = less work.
The problem with this scenario, is that the team that is currently working on project YK12 will eventually realize that they are being punished for being efficient and working properly. They will soon start being inefficient and lazy as the other team in order to be rewarded.
A corporation distributes a piece of personal property to a shareholder, in complete liquidation. The corporation had a basis of $40,000. The property's FMV is $30,000. The effect to the corporation is_____________.
Answer:
The corporation must recognize a $10,000 loss.
Explanation:
The last activity that a corporation must perform upon liquidation is to distribute property, assets or cash to its shareholders. The adjusted basis for any property or assets handed out in a complete liquidation is the fair market value of the property or assets.
In this case, the corporation's property had a basis of $40,000 but a fair market value of $30,000, so the distribution was done using the fair market value of $30,000.
Electrowhip, a company that manufactures blenders and electric whisks, has decided to use a market-penetration pricing strategy. Which of the following, if true, proves their decision to be a wise one?
a. Electrowhip's competitors utilize social media for marketing their products.
b. Electrowhip sells products whose image and quality support high prices.
c. Electrowhip operates in a market with many competitors.
d. Electrowhip does not operate in a price-sensitive market.
e. Electrowhip's products are intended to appeal to the elite in society.
Answer:
The answer is C. Electrowhip operates in a market with many competitors.
Explanation:
First, let re-visit to the penetration pricing strategy definition. It is the strategy where price is set low so that firm can gain market share as quick as possible on the selling point of low price.
With the above definition, a. is not relevant, b. is not correct, d. is not correct because if the market is not price-sensitive, the low price will not be the selling point for them to gain market share, e. is not correct as low pricing is not an appropriate strategy to approach elite level.
With C, when there are many competitors in the market and Electrowhip is unable/ unwilling to design a unique product toward a pre-determined sub-section in market share, penetration pricing strategy seems to be the most appropriate strategy for Electrowhip.
Melissa is the Executive Director of a local food bank and is assessing the financial situation of her not-for-profit organization. Melissa uses a(n) _____ to determine whether revenues from contributions and other sources will cover operating costs.a. Statement of cash flows
b. Income statement
c. Balance sheet
d. Accrual accounting
Answer:Option B
Explanation:
Income statement is used to access the Financial performance of all organizations which makes it the most suitable answer for the question.
When Desi was determining which option works best to encourage employee participation when planning important changes, he learned that this option seems most effective, which option is it?
a. Command and control
b. Rational persuasion
c. Reward and legitimacy
d. Shared power
e. Force coercion
Answer:
D) Shared power
Explanation:
Power sharing refers to a situation where a team leader will allow the team members to have decision power and influence within the group. It is a system that distributes power among all members of the team in order to encourage greater participation in the decision making processes.
In this case, Desi considers that sharing power with his staff will encourage them to participate more in the planning process. When an employee feels that his participation is valued, he/she will not be afraid or indifferent to do so.
Which of the following pairs are characteristics of price-takers?
A. Cost-plus pricing and less competition
B. Cost-plus pricing and lack of product uniqueness
C. Target costing and heavy competition
D. Less competition and target pricing
Answer:
C. Target costing and heavy competition
Explanation:
Rita has just received a major order from Northrop Corporation for her firm's hydraulic lift equipment. After reviewing the order information, Rita willA. send an acknowledgment that the order has been received.B. proceed to vendor analysis.C. submit a competitive bid.D. rewrite her firm's proposal.E. evaluate performance.
Answer:
A) send an acknowledgment that the order has been received.
Explanation:
Under UCC rules, contracts for the sale of products or services worth $500 or more have to be in writing and signed. Instead of a signed contract, a company can accept a written offer (e.g. by email), but it should send a written acknowledgment that the order has been received and accepted (or rejected). This way, both parties have a duty to perform.
When Zappos, Inc., an online marketer of shoes, accessories, and clothing, contracts out the physical distribution task to third parties such as UPS, this arrangement is called ___________. This is due to the fact that UPS does not have managerial authority within the Zappos marketing channel.
a. warehousing.
b. wholesaling.
c. logistics.
d. illegal.
e. outsourcing.
Answer:
e. outsourcing.
Explanation:
Based on the information provided within the question it seems that what Zappos is doing is called outsourcing. This is the act of when a company hires a third party company to undertake all the responsibilities of a certain task or division of the contracting company. Which in this situation Zappos is outsourcing all of their distribution responsibilities and tasks to UPS who are most likely better equipped to handle this and in a cheaper manner.
Co-marketing refers to _____.
a. a project in which clients pay contractors to market and distribute the product/service
b. selling the rights to intellectual property to another firm for a royalty fee
c. outsourcing agreements in marketing between firms
d. efforts among a number of firms to jointly market their products and services
Answer: Option D
Explanation: In simple words, co- marketing refers to the process in which two firms of an industry, who serves the same audience, combines ther resources for increasing their scale of operations with the ultimate goal of increasing profits.
Generally such arrangements do not happen between two major competitors in an industry. This is more common in international businesses where one firm has technology and other has customer base.
Hence from the above we can conclude that the correct option is D .
Co-marketing refers to efforts among several firms to jointly market their products and services. The process allows firms to pool their resources and leverage each other's strengths to increase sales, enhance product utility, and expand their customer base.
Explanation:Co-marketing is defined as efforts among a number of firms to jointly market their products and services. This suggests that answer option d is the way co-marketing is defined. The process of co-marketing allows these firms to pool their resources, thereby leveraging the strengths and capabilities of each other, with the goal of expanding their customer base, enhancing product utility and driving sales growth. Example of co-marketing can be a software company joining forces with a hardware manufacturer to provide a combined product to consumers. It's a win-win strategy where brands complement each other to reach a broader audience.
Learn more about Co-marketing here:https://brainly.com/question/33941496
#SPJ6
Productive inefficiency could arise from a. a waste of available labor b. a lack of resources c. an improvement in technology d. a movement along the production possibilities frontier e. too many goods being produced by the country or firm
Answer:
The correct answer is a. a waste of available labor.
Explanation:
Productive efficiency (also known as technical efficiency) occurs when the economy is using all its resources efficiently, producing maximum production with minimum resources. The concept is illustrated in the Production Opportunity Frontier (FPP) in which all points of the curve are the points of maximum productive efficiency (that is, no more products can be achieved from the present resources).
This happens when the production of an economic good is achieved at the lowest possible cost, given the production of another good (s). In other words, when it is achieved, given the need to produce other goods, the highest possible productivity of a good. In a situation of long-term equilibrium for markets in perfect competition, it is where the average cost is the base on the average of the total cost curve, that is, the cost curve where CM = A (T) C.
Productive efficiency relates to the maximal utilization of resources to produce goods or services without the ability to increase production of one good without reducing another. Inefficiency arises from factors like waste of labor or lack of resources, whereas improvements in technology or movements along the PPF enhance efficiency.
Explanation:Productive efficiency refers to a situation where, given the current inputs and technology, producing more of one good would lead to producing less of another. This concept is visualized with the help of a Production Possibilities Frontier (PPF), which illustrates the trade-offs between two goods or services that an economy can produce. Points on the PPF, such as A, B, C, D, and F in Figure 2.4, represent productive efficiency because they indicate the maximum possible production given the available resources.
Productive inefficiency occurs when the economy is operating inside the PPF. This indicates that the economy could produce more of one or both goods without any trade-offs, meaning not all resources are being used efficiently. Examples of sources of productive inefficiency include a waste of available labor (which means labor resources are not being used to their full potential), a lack of resources (which could prevent the firm from operating at full capacity), and systemic issues like poor management or inadequate infrastructure.
It's important to note that an improvement in technology or a movement along the PPF would not be causes of productive inefficiency; instead, these are factors that can lead to greater efficiency or a redefinition of the production capabilities of an economy. Similarly, producing too many goods generally does not indicate inefficiency, unless it leads to waste due to goods not being consumed or ineffective allocation of resources.
Learn more about Productive Efficiency here:https://brainly.com/question/38848015
#SPJ3
A firm has a production process in which the inputs to production are perfectly substitutable in the long run. Can you tell whether the marginal rate of technical substitution is high or low, or is further information necessary? Discuss. In this example, the marginal rate of technical substitution (MRTS) is
Answer: MRTS =1
Explanation
Since the inputs of the firm are perfectly substitute
MRTS =DC/DL
Where DC = change in capital
= change labour
This means that the graph of labour on x axis and capital on y axis is a straight line graph