Which of the Following Statements About Cost Functions Is True

question 6

Multiple Choice

Which of the following statements about cost functions is true?

• A) Variable costs will always increase in direct proportion to the quantity of output produced.
• B) The less capital equipment employed in the production process relative to labor and other inputs,the longer will be the period of time required to increase significantly the scale of operation.
• C) The shape of the firm's long-run cost function is important in decisions to expand the scale of operations.
• D) none of the above

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Definitions:

Unemployment Rate

The unemployment rate measures the percentage of the labor force that is jobless and actively seeking employment.

Cyclical Unemployment

A form of unemployment that occurs when there is not enough aggregate demand in the economy to provide jobs for everyone who wants to work.

Unemployment Insurance

A government program that provides financial assistance to unemployed workers who meet certain eligibility requirements.

CPI

Consumer Price Index, a measure indicating the average price level of a basket of goods and services purchased by households, used to estimate inflation.