Figure 74 Alt Text for Figure 7

question 217

Multiple Choice

Figure 7.4 Alt text for Figure 7.4: In figure 7.4, a graph representing per-worker production functions.
Long description for Figure 7.4: The x-axis is labelled, capital per hour worked, K/L.The y-axis is labelled, real GDP per hour worked, Y/L.3 concave curves originating from 0 at the vertex are shown.5 points A ($50000, $15000) , B ($60000, $16000) , C ($70000, $16400) , D ($60000, $17000) , and E ($60000, $15000) are plotted.The curve labelled, Production function 1, passes through point E.The curve labelled, Production function 2, passes through points A, B, and C.The curve labelled, Production function 3, passes through point D.These 5 points are connected to their respective coordinates on the x-axis and y-axis with dotted lines.
-Refer to Figure 7.4.Suppose the economy gains more capital per hour worked and experiences technological change.This is shown in the figure above by the movement from

• A)E to B to D.
• B)A to B to C.
• C)A to E.
• D)A to D.
• E)D to A.

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Definitions:

LAC Curves

The Long-Run Average Cost curves, which show the minimum average cost of production at different levels of output.

LMC Curves

Abbreviation for Long-Run Marginal Cost curves, which represent the cost to produce one additional unit of goods when all inputs can be varied.

Returns to Scale

The change in output resulting from proportional change in all inputs (factors of production); can be increasing, constant, or decreasing.

Returns to Scale

The change in output resulting from a proportional change in all inputs (factors of production); it identifies whether increasing inputs leads to proportionate, more than proportionate, or less than proportionate changes in output.