Which Factor Made It Difficult for Major Industries to Hold

question 84

Multiple Choice

Which factor made it difficult for major industries to hold the line against inflation in the 1970s?

• A) The quality of manufactured products increased, causing production costs to increase.
• B) Higher labor costs accompanied a decline in productivity.
• C) The supply of manufactured goods outstripped the demand for goods.
• D) Corporate tax rates tripled during the decade.

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Definitions:

Average Fixed Cost

The fixed costs of production (costs that don't change with the level of output) divided by the quantity of output produced.

Marginal Product

The additional output resulting from a one-unit increase in the input of a particular productive resource, holding all other inputs constant.

Average-Total-Cost

The cost per unit of output, calculated by dividing the total cost (fixed and variable costs) by the total quantity produced.

Marginal-Cost

The expense associated with producing one additional unit of a good or service, critical for decision-making in business and economic policy.