If Capital Per Hour of Labor Grows by 3 Percent

question 162

Multiple Choice

If capital per hour of labor grows by 3 percent a year and labor productivity grows by 1.5 percent a year, the one third rule says that the growth in labor productivity can be divided so that capital growth accounted for percentage points and technological change accounted for percentage points.

• A) 1.0; 0.5
• B) 1.5; 0.0
• C) 2.0; - 0.5
• D) 0.5; 1.0

---

Definitions:

Target Sales Volume

The specific quantity of products a company aims to sell within a certain period to achieve its sales objectives and ensure profitability.

Fixed Costs

Expenses that remain constant regardless of how much is produced or sold, including items like rent, salaries, and insurance.

Unit Contribution Margin

The difference between the selling price per unit and the variable costs per unit, which contributes towards covering fixed costs and generating profit.

Cost Volume Profit Graph

A graphical representation that shows how changes in cost, volume, and profit affect a company's financial situation.