Diminishing marginal product occurs when additional variable inputs ______.
a. improve the efficiency of fixed inputs
b. are too costly to implement in production
c. interfere with efficient use of fixed inputs
d. increase the change in output per hour
c. interfere with efficient use of fixed inputs
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A producer is hiring 20 units of labor and 6 units of capital (bundle A). The price of labor is $10, the price of capital is $2, and at A, the marginal products of labor and capital are both equal to 20. The producer
A. should use more labor and less capital. B. is using the optimal combination of capital and labor. C. should use more capital and less labor. D. cannot determine without more information.
Which of the following will shift the aggregate demand curve to the left?
A. The government increases spending on education. B. Income taxes are lowered. C. Foreign economies fall into recession, reducing their demand for domestic exports. D. Consumers become optimistic about the future.
For a natural monopoly, the efficient quantity is produced when the firm is regulated so that
A) P = ATC. B) P > ATC. C) P = MC. D) P > MC. E) P < MC.
Since most people would be willing to pay far more for a cup of diamonds than for a cup of water,
A) diamonds provide more satisfaction to most people than water provides. B) most people are irrational when it comes to prestige or status goods. C) most people wrongly think they value diamonds more highly than water. D) people's choices and preferences are often inconsistent. E) very few people are ever in danger of dying of thirst.