Table 7-2 Shows the Combinations of Labor and Capital That

question 96

Multiple Choice

Table 7-2 shows the combinations of labor and capital that are used to produce various levels of output
Table 7-2 $$\begin{array} { | c | c | c | c | } \hline \text { Units of capital } & \text { Units of labor } & \text { Total Product } & \text { Marginal product of labor } \\\hline 2 & 0 & 0 & - \\\hline 2 & 1 & 20 & 20 \\\hline 2 & 2 & 44 & 24 \\\hline 2 & 3 & 68 & 24 \\\hline 2 & 4 & 90 & 22 \\\hline 2 & 5 & 78 & - 12 \\\hline\end{array}$$
-Refer to Table 7-2.Based on the input-usage ratio,we can say that the firm is operating _____.

• A)at an economic loss
• B)in the short-run
• C)in a constant-cost industry
• D)in the long-run

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Definitions:

Book Value

The net value of a company's assets as listed on the balance sheet, calculated by subtracting liabilities from total assets.

Commercial Substance

A concept indicating that a transaction significantly changes the economic position or cash flows of the parties involved, beyond mere contractual obligations.

Trade-in Allowance

The amount credited to the buyer by the seller for a traded item, reducing the cost of the new purchase.

Book Value

The net value of a company's assets found on its balance sheet, and is calculated by subtracting liabilities from the total assets.