The law of diminishing marginal returns explains why a marginal revenue product schedule
A. first declines and then increases.
B. is always negative.
C. eventually declines.
D. eventually increases.
Answer: C
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The Federal Reserve uses the federal funds rate as an operating target because
A) it is an excellent indicator of the economy's underlying inflation rate. B) it is very sensitive to bank reserve level changes. C) it is determined by the Treasury. D) the Fed sets the rate directly.
In the long run a monopolistic competitor
A) set MR = MC. B) produces where P = AC. C) sets P > MC. D) All of the above.
Refer to Figure 11-13. The lines shown in the diagram are isocost lines. If the price of labor is $50 per unit, then along the isocost AF, the total cost
A) is $500. B) is $750. C) is $1,250. D) cannot be determined without the price of capital.
A country that dollarizes
A) maximizes its seignorage. B) earns the same amount of seignorage as it would with a currency board. C) earns the same amount of seignorage as it would with exchange-rate targeting. D) eliminates its seignorage. E) must pay seignorage to other governments to use their currency.