Explain the concept of diminishing returns
What will be an ideal response?
The principle of diminishing returns shows that in the short run, beyond some point, output will increase at a decreasing rate. For example, producing more output in an existing production facility by increasing the number of workers sharing the facility will bring into effect the principle of diminishing returns, as output will eventually increase but at a decreasing rate.
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If the government ________ taxes to pay for spending on infrastructure, the result will most likely be a(n) ________ in capital deepening
A) decreases; increase B) increases; increase C) increases; decrease D) eliminates; elimination
Use the information in the table above plus the fact that indirect taxes less subsidies are $10 billion and depreciation is $30 billion to calculate the value of GDP
A) $180 billion B) $150 billion C) $140 billion D) $130 billion
One criticism of the Bertrand pricing model is that
A) the model is implausible when there is product differentiation. B) when there is an oligopoly with no product differentiation, the model's prediction is inconsistent with reality. C) the model's predicted price is solely a function of demand conditions. D) the model's predicted price is dependent on the number of firms.
If the ________ effect is greater than the ___________ effect, a tax cut will increase revenues.
A. price; quantity B. quantity; income C. income; price D. quantity; price