When All Capital and Labor Are Fully Utilized, the Economy

question 63

Multiple Choice

When all capital and labor are fully utilized, the economy is said to be

• A)at the peak of the business cycle.
• B)experiencing an expansion.
• C)at full employment.
• D)sustainable.

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Definitions:

Capital Expenditure

Resources allocated by a corporation to purchase or improve tangible assets like land, factories, or machinery.

Variable Costs

Costs that vary directly with the level of production or sales volume, such as raw materials and direct labor costs.

Contribution Margin

The amount by which sales revenue exceeds variable costs of production, indicating how much contributes to fixed costs and profits.

Marginal Cost

The cost incurred by producing one additional unit of a product or service, important for pricing and production decision-making.