Which of the following is an implication of the law of diminishing returns?
A. Total output will decline as more workers are hired.
B. In the long run, average total cost will eventually decline as output is expanded.
C. In the short run, expansion of output will eventually lead to increases in marginal cost and average total cost.
D. A doubling of all inputs will lead to more than a doubling of output.
Answer: C
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During a study session for an economics exam with three other students, Peter Daltry commented on an example of a consumer who had to decide on number of slices of pizza and cups of Coca-Cola he would consume
Peter explained that "To maximize his utility this consumer must equate the marginal utility per dollar for pizza and Coca-Cola." Was Peter's analysis correct? A) Peter described one of the conditions necessary for utility maximization. The consumer also must equate the marginal utility of pizza and the marginal utility of cups of Coca-Cola. B) Peter's statement is correct but we must also assume that the consumer is rational. C) Peter describes one of the conditions necessary for utility maximization. The second condition is that total spending on both goods must equal the amount available to be spent. D) Peter's statement is correct.
A firm's total profit equals its marginal revenue minus its marginal cost
a. True b. False Indicate whether the statement is true or false
Total consumer surplus in a market is measured as the
A. area bounded below the market clearing price and above the market supply curve. B. horizontal distance from the vertical (price) axis to the equilibrium quantity. C. vertical distance from the horizontal (quantity) axis to the market clearing price. D. area bounded above the market clearing price and beneath the market demand curve.
At the Larson Bakery the marginal products of the first, second, and third sales clerks are 20, 17, and 11 customers served, respectively. The total product (number of customers served) of the three sales clerks is
A. 11. B. 40. C. 46. D. 48.