The Following Data Show the Total Output for a Firm

question 46

Multiple Choice

The following data show the total output for a firm when different amounts of labour are combined with a fixed amount of capital.Assume that the wage per unit of labour is $10 and the cost of the capital is $50.
TABLE 7-3
-Refer to Table 7-3.The average product of labour is highest when the firm hires

• A)1 unit of labour.
• B)2 units of labour.
• C)3 units of labour.
• D)4 units of labour.
• E)5 units of labour.

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Definitions:

World Price

The international market price of a good or service, determined by global supply and demand conditions.

Consumer Surplus

The difference between the total amount consumers are willing and able to pay for a good or service and the total amount they actually pay.

Equilibrium

A state in which market supply and demand balance each other, and as a result, prices become stable.

Market

A venue or mechanism where buyers and sellers come together to exchange goods, services, or information.