The marginal revenue product of labor declines as the number of workers increases because
A) firms hire the most efficient workers first and the least efficient workers last.
B) firms must lower prices for the final product when they want to sell more units.
C) of the law of diminishing marginal product.
D) of diseconomies of scale.
Answer: C
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What problem is caused by subsidizing a natural monopoly regulated using a marginal cost pricing rule?
A) The regulated firm ends up earning an economic profit. B) Consumers pay too much for the product of the monopoly. C) This policy is a two-part tariff, which creates inefficiency. D) The taxes required to gain the revenue used as the subsidy result in a deadweight loss that subtracts from gains in efficiency which result from use of the marginal cost pricing rule. E) The regulated firm goes out of business if it is subsidized.
A krone/euro peg alone is
A) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule. B) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule. C) not enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided fiscal policy will be used as well. D) enough to provide automatic stability in the face of any monetary shocks that shift the AA schedule, provided the government runs a budget deficit. E) enough to provide partial stability in the face of smaller monetary shocks that shift the AA schedule.
Best National Bank is subject to a 10 percent required reserve ratio. If this bank received a new checkable deposit of $1,000 . it could make new loans of:
a. $100 b. $900. c. $1,000 d. $10,000.
Fixed costs
A) do not vary with output B) vary with output C) do not vary with price D) vary with price