28
QuizMultiple Choice

1.1 The Three Questions of Economics

Question 28 • (OC27) Economics-2102310-Sem-Meadows

Read the following scenario. A clothing company wants to expand into new regions. It is looking at an urban area with a large number of vacant warehouses. The population is made up of people with average educations and a lower standard of living. The company is experiencing slower sales but has hopes that product will take off and be successful. Which of the factors of production will the company need to address most closely when making its decision to expand?

Answer
A
land
B
capital
C
land and labor
D
labor and capital

Explanation

The company should examine the available labor force and capital resources. The population’s education and standard of living can affect the availability and cost of workers, while vacant warehouses are existing buildings the company could use as capital resources. Its slower sales also make the financial risk of expanding important. The best choice is labor and capital.

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