“If it were not for the law of diminishing marginal returns, the world’s wheat could be grown in a flower pot.” Explain.
What will be an ideal response?
The law of diminishing returns states that beyond some level of variable input, such as labor, additional amounts of input add diminishing (but not necessarily negative) amounts of output, other inputs held constant. So, holding land constant, additional amounts of labor or fertilizer yield diminishing additional wheat output. If there were no such law, additional amounts of the variable input would yield constant or increasing marginal output, so additional land would never be needed.
You might also like to view...
Nonlinear price discrimination
A) sets the price consumers pay based on quantity purchased. B) is where the firm sets prices in geometrically or exponentially decreasing price points. C) is used in situations where consumers have no reservation prices. D) eliminates deadweight loss.
A deficit ceiling directly limits
A. The trade deficit. B. Inflation. C. The amount of the national debt. D. The amount by which government spending can exceed government revenue.
The accompanying graph depicts demand.
At point A, demand is:
A. perfectly elastic. B. inelastic. C. elastic. D. unit elastic.
Analysis that addresses the question of whether a policy should be used is called ________ analysis.
A. fiscal B. normative C. positive D. monetary