Consider the Following Production and Cost Schedule for a Firm

question 110

Multiple Choice

Consider the following production and cost schedule for a firm.The first column shows the number of units of a variable factor of production employed by the firm. $$\begin{array} { | c | l | l | c | } \hline \begin{array} { c } \text { Total Number of } \\\text { Units of the Factor }\end{array} & \begin{array} { c } \text { Total Number of } \\\text { Units of Output }\end{array} & \begin{array} { l } \text { Price per Unit } \\\text { of Output }\end{array} & \begin{array} { c } \text { Total Cost } \\\text { of Production }\end{array} \\\hline 2 & 12 & \$ 10 & \$ 50 \\\hline 3 & 20 & \$ 9 & \$ 55 \\\hline 4 & 26 & \$ 8 & \$ 60 \\\hline 5 & 30 & \$ 7 & \$ 65 \\\hline 6 & 32 & \$ 6 & \$ 70 \\\hline 7 & 32 & \$ 5 & \$ 75 \\\hline\end{array}$$ TABLE 13- 3
-Refer to Table 13- 3.The increase in total revenue generated by hiring the 5th unit of the factor of production is

• A)- $2.00.
• B)$2.00.
• C)- $11.00.
• D)$11.00.
• E)$7.50.

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Definitions:

External Financing

Funds raised from sources outside the company, such as investors or lenders.

Sustainable Rate

The sustainable rate often refers to the growth rate a company can maintain without needing to increase financial leverage or equity financing.

Internal Rate

The interest rate at which the net present value of all the cash flows from an investment or project is zero.