Using the points on the diagram below, identify which combinations of these points illustrate diminishing returns to capital. Give a brief explanation to support your answer
What will be an ideal response?
The movement from A to B to C illustrates diminishing returns to capital in the diagram. When technology is held constant, equal increases in capital per hour lead to diminishing increases in output per hour. Technology is held constant by moving along a given production function diagram. Capital per hour increases by $10,000 per worker in the movement from A to B and from B to C. The movement from A to B increases output per worker by $1,000. The movement from B to C increases output per worker by $400. Clearly, the additions to output are diminishing.
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The central idea distinguishing the "efficiency wage model" is that the wage paid by Firm A relative to the wages at other firms helps determine
A) Firm A's demand for labor. B) the amount of labor Firm A can hire. C) the productivity of Firm A's workers. D) Firm A's markup fraction.
Which of the following statements is consistent with a decrease in supply?
A) Prices of raw material inputs have increased. B) There has been an advance in technology. C) Consumers' incomes have increased. D) The market price has decreased.
The wage rate is determined by
A. the interaction of supply and demand in the market. B. the substitution and income effects of supply. C. the U.S. government in all circumstances. D. None of the choices are correct.
A GDP deflator is real GDP divided by nominal GDP times 100.
Answer the following statement true (T) or false (F)