If the Per-Worker Production Function Is Y = Ak, Where

question 24

Multiple Choice

If the per-worker production function is y = Ak, where A is a positive constant, then the marginal product of capital:

• A) increases as k increases.
• B) is constant as k increases.
• C) decreases as k increases.
• D) cannot be measured in this case.

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Definitions:

Equipment

Physical items purchased for use in operations of a business, often subject to depreciation for tax purposes.

Depreciation

The process of allocating the cost of a tangible asset over its useful lifespan, representing wear and tear, deterioration, or obsolescence.

Section 1250

Section 1250 of the U.S. Internal Revenue Code deals with the tax treatment of gains from the sale of depreciable real property, distinguishing between ordinary income and capital gains.

Short-term Loss

A financial loss realized on the sale or exchange of an asset held for one year or less.