The law of diminishing marginal productivity implies that identical increases in all inputs eventually will result in smaller incremental increases in total output.
Answer the following statement true (T) or false (F)
False
The law of diminishing marginal productivity assumes that at least one input is fixed and cannot be increased. The definition in the question refers to diseconomies of scale.
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Suppose the market clearing price for apples falls from $3.00 to $2.00 per pound, and the overall market clearing output decreases from 1 million to 1/2 million pounds. How can we explain the fall in price and fall in market output?
A) Supply decreased and demand remained unchanged. B) Supply remained unchanged and demand decreased. C) Demand increased and supply remained unchanged. D) Demand remained unchanged and supply increased.
Suppose Fed's purchase of government bonds results in a $120,000 increase in the excess reserves of a particular bank. What would be the applicable reserve requirement for the whole banking system to be able to expand the money supply by $600,000?
a. 10 percent b. 12 percent c. 16 percent d. 20 percent e. 25 percent
If inflation is fully anticipated and if there are no restrictions on contracts, then inflation will not redistribute purchasing power
a. True b. False
Which of the following is a main limitation of GDP?
A. GDP figures are grossly inaccurate due to sampling errors. B. The real definition of what is and is not included in GDP is unclear. C. GDP includes some products, which by their very nature are bad products, such as military weapons. D. GDP is not a good measure of a nation's overall welfare.