The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:
A. the more an additional unit of capital adds to production.
B. less is produced.
C. the less an additional unit of capital adds to production.
D. less production is wasted.
Answer: C
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In the figure above, if the firm is regulated using an average cost pricing rule, the deadweight loss created is equal to the area of
A) ABG. B) BEFG. C) BCFG. D) BCE. E) None of the above because there is no deadweight loss created.
Refer to the scenario above. If Mary prefers more money to less, ________
A) she will not accept any offer that Beth makes B) she will accept any offer that Beth makes C) she will accept the offer only if Beth offers her $2,500 D) she will accept the offer only if Beth offers her $5,000
One implication of the fact that profit functions are convex in prices is that firms will always prefer:
a. stable input and output prices. b. input and output prices that fluctuate about a given level. c. stable input prices and fluctuating output prices. d. fluctuating input prices and stable output prices.
In the Alcoa case, the Supreme Court abandoned the per se rule and established the rule of reason
a. True b. False Indicate whether the statement is true or false