Two firms with identical capital intensity ratios are generating the same amount of sales. however, firm a is operating at full capacity, while firm b is operating below capacity. if the two firms expect the same growth in sales during the next period, then firm a is likely to need more additional funds than firm b, other things held constant. a. true. b. false

True

Explanation:

Firm A is operating at full capacity, if its sales keep increasing, then t will need to invest to expand its production capacity. Since firm B is operating below full capacity level, if its sales keep increasing it will have some spare production capacity it can use before operating at full capacity.

Therefore firm A will need to invest in an expansion of its production capacity while firm B can keep operating without new investments.

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answer; lags, push the econ below the natural level of output;