The average productivity of capital is defined as the ratio of total capital employed to the total output produced
a. the extra output produced by employing one more unit of capital while holding other inputs constant.
b. the extra output produced by employing one more unit of capital while allowing other inputs to vary.
c. the ratio of total output produced to the quantity of capital employed.
d.
c
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Which of the following is true?
a. International trade makes it possible for a country's consumption possibilities to exceed its production possibilities. b. International trade requires that a country's production possibilities exceed its consumption possibilities. c. A country's production possibilities always equal its consumption possibilities. d. A country's consumption possibilities can never equal its production possibilities because of leakages in the system. e. As long as there is full employment of resources, a country's production possibilities will exceed its consumption possibilities even with trade.
Consider the indifference curve map and budget constraint for two goods, X and Y. Suppose the good on the horizontal axis, X, is normal. When the price of X increases, the substitution effect
a. and income effect both cause an increase in the consumption of X. b. causes a decrease in the consumption of X, and the income effect causes an increase in the consumption of X. However, the substitution effect is greater than the income effect. c. causes an increase in the consumption of X, and the income effect causes a decrease in the consumption of X. However, the substitution effect is greater than the income effect. d. and income effect both cause a decrease in the consumption of X.