Assume a DVC Has a Real Per Capita Output of $1,000

question 103

Multiple Choice

Assume a DVC has a real per capita output of $1,000 as compared to $20,000 for an IAC. If both nations realize a 4 percent growth of their real per capita outputs, after one year the absolute real per capita output gap will

• A)remain unchanged at $19,000.
• B)increase by $760.
• C)decrease by $1,000.
• D)increase by $19,760.

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Definitions:

Contribution Margin

The amount of revenue remaining after deducting variable costs, which contributes towards covering fixed costs and then generating profit.

Operating Income

The income generated from the primary activities of a business, determined by deducting operating costs from the gross profit.

Selling Price

The amount a buyer pays to purchase a product or service from a seller.

Variable Cost

A cost that varies with the level of output or production, such as materials and labor directly involved in manufacturing.