Table 7-4 Table 7-4 shows a production relationship. The cost of one day of labor is $65 and the product price is $1 per unit. How much will the labor input increase if the capital stock were increased from 3 to 4?
A)From 3 to 4
B)From 4 to 5
C)From 4 to 6
D)Stays the same

Question

Table 7-4  Table 7-4 shows a production relationship. The cost of one day of labor is $65 and the product price is $1 per unit. How much will the labor input increase if the capital stock were increased from 3 to 4?
A)From 3 to 4 
B)From 4 to 5 
C)From 4 to 6 
D)Stays the same

Quizplus · Accepted Answer

From the table, we can see that with 3 units of capital stock, we need 5 units of labor input to produce 20 units of output per day.

With 4 units of capital stock, we need to find the corresponding labor input needed to produce 40 units of output per day. Using the table, we can find that we need 7 units of labor input.

Therefore, the labor input will increase from 4 to 5 if the capital stock is increased from 3 to 4.

Table 7-4 Table 7-4 Shows a Production Relationship