Refer to the Following:
the Capital Stock Is Fixed at 50

question 99

Multiple Choice

Refer to the following:
The capital stock is fixed at 50 units, the price of capital is $30 per unit, and the price of labor is $25 per unit.

$$\begin{array} { c c } &\text { Average } \\\text { Output } & \text { Variable Cost }\\\hline 10 & \$ 40 \\20 & 30 \\30 & 45 \\40 & 60 \\\hline\end{array}$$
-How much does the 23rd unit of output add to the firm's total cost?

• A) $75
• B) $135
• C) $750
• D) $1,350
• E) none of the above

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Definitions:

Interest Rate

The percentage of an amount of money charged by a lender to a borrower for the use of assets, typically expressed as an annual percentage rate.

Investment Tax Credit

A fiscal policy tool used to encourage companies to invest by providing a tax rebate on their investments.

Equilibrium

A state in a market where supply equals demand, and there is no incentive for price to change, leading to market stability.

Interest Rate

A lender's charge to a borrower, represented as a percentage of the principal amount, for the privilege of borrowing assets.