Only two resources, capital and labor, are used in an economy to produce an output of 600 million units. If the total cost of capital resources is $300 million and the total cost of labor resources is
$100 million, then the per-unit production costs in this economy are
A) $0.67.
B) $1.50.
C) $2.00.
D) $3.00.

Question

Quizplus · Accepted Answer

The total cost of production is the sum of the cost of capital and labor, which is $300 million + $100 million = $400 million. The per-unit production cost is then the total cost divided by the output, which is $400 million / 600 million units = $0.67 per unit.

Only Two Resources, Capital and Labor, Are Used in an Economy