Explain how marginal product can be negative.
What will be an ideal response?
Adding more inputs can increase output; however, continuing to add too much of an input can cause a diminishing return, reducing total output. If we add cooks to a restaurant kitchen, we can increase output; but if we add too many cooks, we can actually reduce output because they get in each other's way. If adding another unit of labor causes total output to fall, then the input is exhibiting negative marginal product.
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A rich nation will trade with a poor nation because the
A) poor nation has the absolute advantage in producing all products. B) poor nation has the comparative advantage in producing a product. C) rich nation has the comparative advantage in producing all products. D) rich nation has the absolute advantage in producing all products.
Along a straight-line demand curve, the
A. slope is constant. B. ratio P / Q constantly changes. C. elasticity grows much smaller toward the right-hand end. D. All of the responses are correct.
Which of the following goods is NOT subject to the free-rider problem?
A. the local police force B. public fireworks C. a public park D. a mass transit system
As a method of resource allocation, force
A) is not important. B) plays a crucial negative role. C) plays a crucial positive role. D) plays a crucial role for both good and ill.