The law of diminishing marginal product is responsible for
A) economies of scale.
B) constant returns to scale.
C) diseconomies of scale.
D) none of the long-run relationships.
Answer: D
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A firm produces its product using both capital and labor. When it does not change its capital usage, but doubles its labor input, its output increases by less than 50 percent. Which of the following is the most likely explanation of this finding?
A) the principle of opportunity cost B) the spillover principle C) the principle of diminishing returns D) the marginal principle
Explain why public goods can be classified as market failure? Explain what problem arises when public goods are produced?
What will be an ideal response?
By itself, the substitution effect of an increase in the wage rate will
a. always lead to an increase in the quantity of labor supplied b. always lead to a decrease in the quantity of labor supplied c. lead to an increase in the quantity of labor supplied only if leisure is like a normal good d. lead to an increase in the quantity of labor supplied only if leisure is not a normal good e. lead to an increase in the quantity of labor supplied only if the income effect works in the same direction
Keynes argued that the downward slope of the demand for money curve depends on the:
A. equation of exchange. B. rate of interest. C. federal funds rate. D. discount rate.