The following graph shows the marginal and average product curves for labor, the firm's only variable input. The monthly wage for labor is $2,800. Fixed cost is $160,000.
When the firm uses 40 units of labor, how much output does it produce?
A. 1,600 units
B. 2,800 units
C. 4,000 units
D. 400 units
E. none of the above
Answer: A
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In the above table, the average fixed cost at 4 units of output is
A) $1.00. B) $4.50. C) $4.70. D) $4.80.
The marginal propensity to consume can best be described as:
A) consumption/income B) the impact of a change in income on GDP C) the change in income divided by the change in consumption D) the change in consumption divided by the change in income
An example of entitlement spending is:
A. national defense. B. Social Security. C. police protection. D. garbage collection.
The General Theory of John Maynard Keynes exerted a major impact on macroeconomics during the 20th century primarily because
a. it provided the only logically consistent view of what caused the Great Depression. b. it provided a reasonable explanation of what went wrong during the Great Depression and what could be done to prevent it from happening again. c. it explained how gross domestic product could be measured and why this was important. d. it derived the conditions necessary for maximum efficiency of resource use and explained how these conditions could be achieved through central planning.