Suppose That Real Domestic Output in an Economy Is 20

question 71

Multiple Choice

Suppose that real domestic output in an economy is 20 units,the quantity of inputs is 10,and the price of each input is $4.
-Refer to the above information.All else being equal,if the price of each input increased from $4 to $6,productivity would:

• A) fall from 2 to 3.
• B) fall from .50 to .33.
• C) rise from 1 to 2.
• D) remain unchanged.

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Definitions:

Fixed Costs

Fixed Costs are business expenses that remain constant regardless of the volume of goods or services produced, such as rent, salaries, and loan payments.

Favorable Volume Variance

A metric that indicates a company has produced or sold more than initially anticipated, leading to increased profitability.

Contribution Margin

The difference between the sales revenue of a company and its variable costs.

Fixed Budget

A budget that remains unchanged and is based on a fixed level of activity, regardless of actual levels of output, sales, or revenue throughout the budget period.