The Rule of 70 States That

question 19

Multiple Choice

The rule of 70 states that:

• A) if y_t grows at a rate of g percent per year, then the number of years it takes y_t to double is approximately equal to 70/g
• B) if y_t grows at a rate of g percent per year, then the number of years it takes y_t to double is exactly equal to 70/g
• C) if y_t grows at a rate of g percent per year, then the number of years it takes y_t to double is approximately equal to g/70
• D) if y_t grows at a rate of g percent per year, then the number of years it takes y_t to triple is approximately equal to 70/g
• E) if y_t grows at a rate of g percent per year, then the number of years it takes y_t to double is approximately equal to 70/(1 + g)

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Definitions:

Marginal Cost

The expenditure related to manufacturing one more unit of a product or service.

Average Fixed Cost

The total fixed costs of production divided by the quantity of output produced, showing how fixed costs change with output levels.

Average Variable Cost

The total variable cost divided by the number of units produced, reflecting the variable cost of producing each additional unit.

Total Variable Cost Curve

A graph that shows the relationship between total variable cost and the level of a firm’s output.