Suppose that an economy produces 500 units of output. It takes 10 units of labor at $15 a unit and 4 units of capital at $50 a unit to produce this output. The per-unit cost of production is:
A. $1.42.
B. $0.40.
C. $1.24.
D. $0.70.
Answer: D
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Suppose the demand for hamburgers increases. In the short run, firms that produce hamburgers will experience a rise in prices, which will induce them to
A) increase production and decrease the number of workers. B) decrease production and increase the number of workers. C) decrease production and decrease the number of workers. D) increase production and increase the number of workers.
When economy-wide business activities are increasing, they are referred to as
A) contractions. B) expansions. C) anti-cycles. D) corrections.
All of the following are true concerning the flexible exchange rate system except one. Which is the exception?
a. It is the same as a floating exchange rate system. b. It is a system in which supply and demand determine the exchange rate. c. Government officials have little direct role in the foreign exchange market. d. Exchange rates may fluctuate considerably from time to time. e. Exchange rates are fixed by the central banks of the various countries.
A situation in which an individual has no information about probabilities and the underlying distributions of the possible outcomes of an investment choice is called:
a. a prior distribution. b. updating. c. risk tolerance. d. pure uncertainty.