"If it were not for the law of diminishing marginal returns, the world's wheat could be grown in a flower pot." Explain
The law of diminishing returns states that beyond some level of variable input, such as labor, additional amounts of input add diminishing (but not necessarily negative) amounts of output, other inputs held constant. So, holding land constant, additional amounts of labor or fertilizer yield diminishing additional wheat output. If there were no such law, additional amounts of the variable input would yield constant or increasing marginal output, so additional land would never be needed.
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There are about 5 million business firms in the Unites States.
Answer the following statement true (T) or false (F)
In the long run, perfectly competitive firms will exit the market if the price is
A) higher than average variable cost. B) equal to average total cost. C) less than average total cost. D) equal to average fixed cost. E) equal to marginal revenue.
If other factors are held constant, what happens when the federal government finances a growing budget deficit by increasing the amount it borrows from the private sector?
A) There will be an increase in the interest rate. B) There will be a decrease in the interest rate. C) The crowding out effect will be cancelled out. D) There will be an increase in net exports.
Net unilateral transfers would appear in a nation's
A) current account. B) capital account. C) official reserve transaction account. D) financial account.