Refer to the Information Provided in Table 8

question 144

Multiple Choice

Refer to the information provided in Table 8.5 below to answer the questions that follow.
Table 8.5

-Refer to Table 8.5.The equilibrium level of aggregate output equals

• A)$3,000 million.
• B)$4,000 million.
• C)$5,000 million.
• D)$6,000 million.

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Definitions:

Marginal Product

The extra production generated when one more unit of a particular input is added, with all other inputs remaining unchanged.

Law of Diminishing Returns

An economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain constant.

Extra Output

The additional production that is generated as a result of adding more of a variable input, such as labor or capital.

Diminishing Returns

A principle stating that as additional amounts of a variable input are added to a fixed input, beyond some point the marginal product of the variable input begins to decrease.