Figure 7-16

In Figure 7-16, as we move from A to B,
A)the relative price of machines falls.
B)total cost falls.
C)output increases.
D)labor becomes less productive relative to capital.

Question

Figure 7-16

In Figure 7-16, as we move from A to B,
A)the relative price of machines falls. 
B)total cost falls. 
C)output increases. 
D)labor becomes less productive relative to capital.

Quizplus · Accepted Answer

Moving from A to B represents an increase in capital, leading to an increase in the productivity of the production process and, thus, an increase in output. The other options are not supported by the information provided in the image.

Figure 7-16 In Figure 7-16, as We Move from a to B