An Economy Is Employing 2 Units of Capital, 5 Units

question 179

Multiple Choice

An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labour to produce its total output of 640 units.Each unit of capital costs $10, each unit of raw materials, $4, and each unit of labour, $3.Refer to the above information.If the per unit price of raw materials rises from $4 to $8 and all else remains constant, the per unit cost of production will rise by about:

• A)100 percent.
• B)50 percent.
• C)40 percent.
• D)30 percent.

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Definitions:

Demand Curve

A visual representation that shows the relationship between the price of a product and the quantity of it that consumers are willing and able to purchase at various prices.

Marginal Revenue

The extra revenue generated by the sale of an additional unit of a product or service.

Marginal Cost

The cost of producing one additional unit of a good or service.

Marginal Cost

The expense associated with creating an extra unit of a product or service.