Explain the law of diminishing returns and illustrate it with a relevant example
The law of diminishing returns holds that as additional increments of resources are added to a certain purpose, the marginal benefit from those additional increments will decline. For example, when government spends a certain amount more on reducing crime, the original gains in reducing crime could be relatively large. But additional increases typically cause relatively smaller reductions in crime, and paying for enough police and security to reduce crime to nothing at all would be tremendously expensive.
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Taxes provide individuals with incentive to:
(a) Increase the number of working hours. (b) Increase productivity by working longer and harder. (c) Direct resources to uses where taxes are relatively low or nonexistent. (d) Buy and save more.
Suppose the representative firm suddenly has less capital at its disposal. What happens to labor demand?
A) It increases. B) It stays the same. C) It decreases. D) We cannot tell.
In recent years, the poorest 20 percent of the U.S. population received approximately 15 percent of the total income
a. True b. False Indicate whether the statement is true or false
The Laffer curve illustrates that
a. deadweight loss rises by the square of the increase in a tax. b. deadweight loss rises exponentially as a tax increases. c. tax revenue first rises, then falls as a tax increases. d. Both a) and b) are correct.