If the MPC Equals 0

question 11

Multiple Choice

If the MPC equals 0.7 and the MPM equals 0.10, then the spending multiplier equals

• A)10
• B)9
• C)5
• D)3.3
• E)1.1

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Definitions:

AVC

Average Variable Cost, calculated by dividing total variable cost by the quantity of output produced.

AP

If this refers to 'Average Product', it measures the output produced per unit of an input, averaging the total production over units of input. If it's another concept, additional context is needed for an accurate definition.

Marginal Product

The additional output that results from using one more unit of a particular input while holding other inputs constant.

Variable Resource

A factor of production whose quantity can be changed easily by a firm in the short run to adjust output levels.