Suppose That the Amount of Capital and Plant Size Are

question 90

Multiple Choice

Suppose that the amount of capital and plant size are fixed for a firm. With 10 workers, it can produce 180 units of output and with 11 workers, the output produced is 190 units. Which of the following statements is true?

• A) The average product of labour when 10 workers are hired is 10 units.
• B) When the 11th worker is hired, average product of labour is greater than marginal product.
• C) The additional unit of labour hired by the firm exhibits increasing returns.
• D) The marginal product of the 11th worker is 18 units.

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Definitions:

Strike Price

The specified price at which the buyer of an option can buy (in the case of a call option) or sell (in the case of a put option) the underlying asset.

Risk-free Rate

The theoretical rate of return of an investment with zero risk of financial loss, typically represented by the yield on government securities.

Maturity

The time at which payment to a bondholder is due or the termination date of an investment contract.

Stock Price

The cost of purchasing a share of a company on the stock market at any given time.