An economy is employing 2 units of capital, 5 units of raw materials, and 8 units of labor to produce its total output of 640 units. Each unit of capital costs $10; each unit of raw materials, $4; and each unit of labor, $3. If the per-unit price of raw materials rises from $4 to $8 and all else remains constant, the per-unit cost of production will rise by about

A. 100 percent.
B. 50 percent.
C. 40 percent.
D. 30 percent.

ANSWER:

D. 30 percent.