If the Quantities of Labor and Capital in an Economy

question 4

Multiple Choice

If the quantities of labor and capital in an economy each increase by the same x percent,which of the following will increase by x percent?

• A)marginal product of capital
• B)economic profits
• C)share of capital income in national income
• D)rental price of capital
• E)none of the above

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Definitions:

Break-even Sales

The amount of revenue required to cover both the variable and fixed costs of production, leading to a situation where a business makes neither profit nor loss.

Variable Costs

Costs that vary directly with the level of production output.

Fixed Costs

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

Operating Income

The profit realized from a business's core operations, excluding deductions of interest and tax, representing the efficiency of the company's core business.