If There Is Unemployment and All Businesses Are Operating at Less

question 145

Multiple Choice

If there is unemployment and all businesses are operating at less than full capacity, then

• A) there are too many workers, and some people ought to leave the labor force.
• B) we are not experiencing a net social cost to unemployment because it is offset by the capacity levels of the factories.
• C) society is producing inside its production possibilities curve.
• D) society is at the wrong point on the production possibilities curve.

---

Definitions:

Variable Cost

A financial term describing expenses that vary directly with the production volume, such as materials and labor.

Fixed Costs

Expenses that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.

Activity-Based Costing

A costing method that identifies activities in an organization and assigns the cost of each activity to all products and services according to the actual consumption by each.

Break-Even Point

The point at which total revenues equal total costs, resulting in no profit but no loss.