Table 30.5 $$\begin{array} { | r | c | c | c | }
\hline \text { Output (urits) } & \text { Labor (urits) } & \text { Output (urits) } & \text { Capital (urits) } \
\hline 10 & 1 & 20 & 1 \
\hline 26 & 2 & 56 & 2 \
\hline 38 & 3 & 86 & 3 \
\hline
\end{array}$$ Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of capital?
A)6 units per $1 of cost.
B)36 units per $1 of cost.
C)56 units per $1 of cost.
D)9.33 units per $1 of cost.

Question

Table 30.5 $$\begin{array} { | r | c | c | c | } 
\hline \text { Output (urits) } & \text { Labor (urits) } & \text { Output (urits) } & \text { Capital (urits) } \
\hline 10 & 1 & 20 & 1 \
\hline 26 & 2 & 56 & 2 \
\hline 38 & 3 & 86 & 3 \
\hline
\end{array}$$ Assume that in Table 30.5 the cost of labor is $4 per unit and the cost of capital is $6 per unit.In Table 30.5,what is the cost efficiency of the second unit of capital?
A)6 units per $1 of cost.
B)36 units per $1 of cost.
C)56 units per $1 of cost.
D)9.33 units per $1 of cost.

Quizplus · Accepted Answer

The cost efficiency of the second unit of capital is calculated by the increase in output divided by the cost of the capital. The increase in output from the first to the second unit of capital is 56 - 20 = 36 units. The cost of one unit of capital is $6. Therefore, the cost efficiency is 36 units / $6 = 6 units per $1 of cost.

Table 305 Assume That in Table 30