Figure 25-1

question 2

Multiple Choice

Figure 25-1.On the horizontal axis,K/L represents capital (K) per worker (L) .On the vertical axis,Y/L represents output (Y) per worker (L) .
-Refer to Figure 25-1.The shape of the curve is consistent with which of the following statements about the economy to which the curve applies?

• A)In the long run,a higher saving rate leads to a higher level of productivity.
• B)In the long run,a higher saving rate leads to a higher level of income.
• C)In the long run,a higher saving rate leads to neither a higher growth rate of productivity nor a higher growth rate of income.
• D)All of the above are correct.

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Definitions:

Special One-time Order

An order that is not usual and is not expected to recur in the foreseeable future, often at a negotiated price different from regular orders.

Variable Selling

Costs related to selling that vary with the level of sales activity, such as commissions or shipping charges.

Production Capacity

The maximum output that a business can produce in a given period under normal working conditions.

Fixed Manufacturing Overhead

Costs associated with manufacturing that do not vary with the level of production, such as rent, salaries, and insurance.