If the Slope of the Per-Worker Production Function Is 1/4

question 17

Multiple Choice

If the slope of the per-worker production function is 1/4 in a given range, how will a $10,000 increase in capital per hour worked affect real GDP per hour worked in the same given range?

• A)Real GDP per hour worked will increase by $2,500.
• B)Real GDP per hour worked will increase by $40,000.
• C)Real GDP per hour worked will increase by $10,000.
• D)Real GDP per hour worked will decrease by $40.000.
• E)Real GDP per hour worked will decrease by $10,000.

---

Definitions:

Economies of Scale

The cost advantages that enterprises obtain due to their scale of operation, leading to a reduction in average costs with increased output.

Total Fixed Cost

Total Fixed Cost is the sum of all costs that remain constant regardless of the level of production or business activity.

Economies of Scale

Businesses gain cost benefits from increasing their scale of operations, leading to a decline in the cost per unit of output as the production size enlarges.