Suppose that you run a house-painting company and currently have 2 workers painting a total of 4 houses per month. If you hire a third worker, 6 houses can be painted per month. If you hire a fourth worker, 9 houses can be painted, and a fifth and sixth worker will increase the number of houses painted to 13 and 15, respectively. Diminishing returns
A. set in when the sixth worker is hired.
B. have not yet set in because output is still increasing.
C. set in when the fourth worker is hired.
D. set in when the fifth worker is hired.
Answer: A
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What can be concluded from Milton Friedman and Edmund Phelps' expectations-augmented Phillips curve?
A) that there is no long run tradeoff between unemployment and inflation B) that there is a short run tradeoff between unemployment and inflation C) that there are two types of Phillips curves D) all of the above E) none of the above
Which feature of a market would contribute most to overall social welfare?
a. Low prices and high outputs b. Reduction in costs due to technological improvements c. The invention of new products d. Difficult to weigh a, b, and c without further information about society's preferences
During a period when new entrants are being attracted to an industry, we would expect that: a. economic profits are positive
b. as a result, economic profits are falling. c. as a result, economic profits are rising. d. both (a) and (b) are true.
If labor supply and labor demand both increase, employment
a. and the real wage rate will both increase b. will increase but the real wage rate will fall c. will increase but the real wage rate will remain constant d. and the real wage rate will remain constant e. will increase but the effect on the real wage rate will depend on the magnitude of the shifts