Assume you are in the business of producing and selling hats. If you could produce more hats with the same input, what would happen to your productivity and profits assuming the price of your hats remains the same?
A) Increase in productivity, decrease in profits.
B) Increase in productivity, increase in profits.
C) Decrease in productivity, decrease in profits.
D) Decrease in productivity, increase in profits.

Question

Quizplus · Accepted Answer

Producing more hats with the same input increases productivity because you're getting more output per unit of input. Assuming the price of hats remains the same and costs do not increase, profits would also increase because you're selling more units without an increase in production costs.

Assume You Are in the Business of Producing and Selling