Figure: Change in the Total Product (Figure: Change

question 186

Multiple Choice

Figure: Change in the Total Product (Figure: Change in the Total Product) Look at the figure Change in the Total Product.The figure shows a production function that moves from TP₁ to TP₂.Which of the following choices is a likely cause of this shift?

• A)Workers in the firm are less productive on average.
• B)The firm employed more of a variable input in the short run.
• C)The firm has suffered a decrease in available technology.
• D)The firm employed more of a fixed input in the long run.

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Definitions:

Mark-Up Percentage

The percentage added to the cost price of goods to cover overhead and profit.

Total Variable Cost

The aggregate of all variable costs that are incurred for a particular level of output or production.

Total Annual Fixed Costs

The sum of all business expenses that are constant and do not change with the level of production within the year.

Profit Maximising Model

A theoretical framework or strategy aimed at increasing a firm’s profits to the highest possible level.