Which of the following best describes the law of diminishing marginal returns?
a. When more and more of a variable resource is added to a given amount of a fixed resource, the resulting change in output will eventually diminish and could become negative.
b. The notion that as a person consumes more and more of a good, such as 12 ounce cups of lemonade, the marginal utility from each additional cup will tend to decline.
c. The empirical fact that positive economic profits will tend to decline over time as new firms attracted by the extra-normal profit opportunity enter the market.
d. When more and more capital per labor is used in production, the marginal product of labor eventually declines and could become negative.
a
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The economy needs some unemployment to operate efficiently, because without it
A) workers will find it difficult to find a job, leading to reduced wages and prices. B) firms will find it difficult to recruit workers, leading to increased wages and prices. C) firms will find it difficult to recruit workers, leading to reduced wages and prices. D) workers will find it difficult to find a job, leading to increased wages and prices.
Refer to Figure 4.1. Alvin's available strategies include
A) top and bottom. B) up and down. C) left and right. D) all of the above
Which of the following is a characteristic of stock?
A) Stock represents ownership in a firm B) Stock represents a promise to repay a fixed amount of funds. C) The face value or principal plus interest is repaid at a specified period of time. D) The length of coupon payments is fixed by the stated maturity period.
A firm produces in a perfectly competitive market and hires labor in a perfectly competitive labor market. The firm hires four workers, the marginal product of the fourth worker is 4, and the wage rate is $40 . The firm produces 100 units of the product, which sell for a price of $10 . This firm is
a. maximizing profit when it hires four workers b. not maximizing profit and should hire more workers to increase profit c. not maximizing profit and should hire fewer workers to increase profit d. not maximizing profit when it produces 100 units of the product and should increase production to increase profit e. not maximizing profit when it produces 100 units of the product and should decrease production to increase profit