What is the law of diminishing marginal product? What causes it?
The law of diminishing marginal product states that as the amount of a variable input is increased, while the quantity of other fixed inputs are held constant, a point will ultimately be reached beyond which marginal product will decline. We expect an initial rise in marginal product because of gains from specialization. However, these benefits will eventually be exhausted at some larger output level. In addition, the size of the operation expands with more and more units of one resource being used, we will see a bottleneck effect where workers (or other resources) essentially get in each others' way.
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Answer the next question on the basis of the following data. OutputTotal Cost0$24133241348454561669If the marginal cost of the seventh unit of output is $9, then the total cost of producing seven units is
A. $78. B. $84. C. $80. D. unknown.
If a firm has consumers with different demands practices two-part pricing and it is profitable for the firm to sell to all consumer types, the profit-maximizing user fee will be ________ the firm's marginal cost of use.
A) greater than B) double C) less than D) equal to
Which of the following occurs when goods in a market are being produced and sold at the lowest possible average cost?
a. Productive efficiency b. Monopolistic competition c. Allocative efficiency d. Perfect competition
In his book The Other Path, de Soto suggests that the key to economic development is
A. Limiting capitalism and profit takers. B. Transactions within the "official" economy. C. Government control of resources. D. Entrepreneurship and market forces.