Consider a Basket-Producing Firm with Fixed Capital

question 69

Multiple Choice

Consider a basket-producing firm with fixed capital.If the firm can produce 24 baskets per day with 3 workers and then increases production to 36 baskets per day with 4 workers,then which of the following statements is definitely true?

• A)Marginal product for this firm is rising.
• B)The marginal product of the fourth worker is 9.
• C)Average product for this firm is rising.
• D)The firm has passed the point of diminishing marginal productivity.
• E)With 4 workers,the average product is greater than the marginal product.

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Definitions:

Economic Life Cycle

The different stages an individual goes through from dependence to independence, potentially to wealth accumulation, and finally to retirement and dependence once more, in terms of earning and spending.

Savings Rates

The portion of disposable income that individuals, businesses, or economies save rather than spend on consumption, usually expressed as a percentage.

Permanent Income

A person’s normal income.

Transitory Income

Income that is temporary or not expected to recur on a regular basis, affecting individuals' spending and saving decisions.