Refer to the graph shown, which shows total product. At point A:
A. marginal product is at its minimum point.
B. marginal product is at its maximum point.
C. average product is at its maximum point.
D. marginal product is zero.
Answer: B
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Suppose capital and labor are perfect substitutes in a long-run production process. If labor costs $15 per hour and the rental rate of capital is $20 per hour, what can we say about the profit maximizing choice of labor and capital inputs?
A) We will only use labor in the production process B) We will only use capital in the production process C) We will use equal amounts of capital and labor D) The optimal capital-labor ratio is 0.75-to-1.
Which of the following shows the relationship between national income (GDP) and total spending?
a. Demand schedule b. Consumption curve c. Expenditure schedule d. Balance schedule
An important characteristic of private goods is
A) the nonexclusion principle. B) the principle of rival consumption. C) the principle of joint consumption. D) the principle of conspicuous consumption.
If a decrease in income results in a decrease in the quantity demanded for a product, the product is ________, and the value of the income elasticity of demand is ________.
A. a normal good; positive B. a normal good, negative C. an inferior good; positive D. an inferior good; negative