Number of workersUnits of output0012525539541255150Table 8.2Refer to Table 8.2, which gives a firm's production function. Assume that all non-labor inputs are fixed. Diminishing returns set in with the addition of the:
A. third worker.
B. fourth worker.
C. fifth worker.
D. sixth worker.
Answer: B
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Suppose the demand for pizza in a small isolated town is p = 10 - Q. The only two firms, A and B, behave as Cournot duopolists. Each has a cost function TC = 2 + Q
If the government wants to subsidize firm A to raise its output to that of a Stackelberg leader, how large should the subsidy be?
At his current level of output, a monopolist has a MR of $10, a MC of $6, and an economic profit of zero. If the market demand curve is downward sloping and his marginal cost curve is upward sloping, the monopolist: a. is producing at the profit-maximizing level of output
b. could increase profit by increasing output. c. could increase profit by increasing his price. d. should exit the market if significant fixed costs have been incurred.
Mary takes out a fixed interest rate loan and then inflation rises more than expected. The real interest rate she pays is
A. higher than she'd expected, and the real value of the loan rises. B. higher than she'd expected, and the real value of the loan falls. C. lower than she'd expected, and the real value of the loan rises. D. lower then she'd expected, and the real value of the loan falls.
The location of the product supply curve depends on the:
A. production technology. B. number of buyers in the market. C. tastes of buyers. D. location of the demand curve.