Consider a House-Construction Firm with Fixed Capital

question 99

Multiple Choice

Consider a house-construction firm with fixed capital.The firm can build 8 houses per year with 16 workers and 8.8 houses per year with 17 workers.If it is currently building 8.8 houses per year,which of the following is true?

• A)Average product is at a maximum with 16 workers.
• B)Average product is at a maximum with 17 workers.
• C)The marginal product is below the average product.
• D)The firm has already passed the point of diminishing marginal productivity.
• E)The firm has not yet reached the point of diminishing average productivity.

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Definitions:

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A measure of the density of a substance compared to the density of water, indicating its concentration.

Reagent Strip

A diagnostic tool used to perform tests on bodily fluids through chemical reactions that indicate the presence of certain conditions or substances.

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Chemical compounds produced by the liver from fatty acids during periods of low food intake, carb restrictive diets, starvation, or prolonged intense exercise.

Metabolism

The biochemical processes that occur within a living organism to maintain life, involving the creation and breakdown of energy and substances.