Suppose Each Worker Must Use Only One Shovel to Dig

question 12

Multiple Choice

Suppose each worker must use only one shovel to dig a trench,and shovels are useless by themselves.In the short run,an increase in the price of shovels will result in

• A) fewer shovels being purchased.
• B) more workers being hired.
• C) a decrease in the firm's output.
• D) no change in the firm's output.

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Definitions:

Average Total Cost

The total cost of production divided by the number of units produced, representing the cost per unit of output.

Average Variable Cost

The total variable cost divided by the number of units produced, representing the variable cost per unit of output.

Average Fixed Cost Curve

A graphical representation showing how average fixed costs (costs that do not change with the level of output) decreases as production increases.

Output

The total amount of goods and services produced by an economy over a specific period.