In the Production Process of a Final Good Industry, the Direct

question 13

Multiple Choice

In the production process of a final good industry, the direct factor requirements per unit of output will be __________ the total factor requirements per unit of output; if the industry is relatively capital-intensive when classified by direct requirements, it __________ be relatively capital-intensive when classified by total requirements.

• A) greater than; must also
• B) greater than; may not necessarily
• C) less than; must also
• D) less than; may not necessarily

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Definitions:

Average Product

The output per unit of input, typically calculated by dividing total output by the quantity of a specific input used.

Average Total Cost

The total cost divided by the number of units produced, representing the cost per unit of output.

Average Variable Cost

Average Variable Cost is calculated by dividing the total variable cost (cost that changes with the amount of output) by the quantity of output produced.

Marginal Cost

An incremental expense associated with manufacturing one extra item of a product.