The Figure Below Shows Three Different Per-Worker Production Functions: PF₁,PF₂,and

question 52

Multiple Choice

The figure below shows three different per-worker production functions: PF₁,PF₂,and PF₃.If PF₁ is the initial per-worker production function for a farm,which of the following reflects an increase in the number of tractors per worker in the farm?

• A)A movement from point D to point C
• B)An upward shift from PF₁ to PF₂
• C)A downward shift from PF₁ to PF₃
• D)A movement from point C to point D
• E)A movement from point D to point B

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Definitions:

Variable Costing

A method of inventory costing that includes only variable production costs—direct materials, direct labor, and variable manufacturing overhead—in product costs, excluding fixed manufacturing overhead.

Per Unit

A term that refers to expressing costs, revenues, or any other financial metric on a per unit of production or per unit of sale basis.

Fixed Manufacturing Overhead

These are production costs that do not change with the level of manufacturing activity, such as rent for factory premises.

Inventories

Assets held for sale in the ordinary course of business, or materials to be used or consumed in the production process.