Suppose That an Increase in Capital Per Hour Worked from $15,000

question 95

Multiple Choice

Suppose that an increase in capital per hour worked from $15,000 to $20,000 increases real GDP per hour worked by $500.If capital per hour worked increases further to $25,000,by how much would you expect real GDP per hour worked to increase if there are diminishing returns?

• A)by less than $500
• B)by exactly $500
• C)by more than $500 but less than $5,000
• D)by more than $5,000 but less than $20,000

Interpret and compute financial ratios and leverages such as EPS, DFL, and ROE.

Determine the effects of financial leverage on a firm's financial performance.

Analyze the role of capital structure on a firm's risk and return profile.

Understand the impact of fixed and variable costs on business profitability and risk.

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Definitions:

Federal Income Taxes

Taxes levied by the U.S. federal government on individual and corporate income.

FICA Taxes

Federal taxes in the United States collected to fund Social Security and Medicare, required deductions from employees’ paychecks.

Quarterly Federal Tax Return

A tax document filed four times a year by employers to report their employee's wages and the federal income and FICA taxes withheld.

FUTA Tax Return

A federal tax form required from employers to report and pay unemployment taxes to the Internal Revenue Service, associated with the Federal Unemployment Tax Act.