Refer to Figure 22-1. Diminishing marginal returns is illustrated in the per-worker production function in the figure above by a movement from
A) C to D. B) D to C. C) B to C. D) A to C.
D
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In considering "returns to scale" we assume that production processes are homothetic.
Answer the following statement true (T) or false (F)
During a year of operation, a firm collects $450,000 in revenue and spends $100,000 on labor expense, raw materials, rent, and utilities. The firm's owner has provided $750,000 of her own money form her personal portfolio instead of investing the money and earning a 10% annual rate of return. The firm also operates out of a building they own worth $1,000,000 which the owner inherited 25 years ago.
1.The explicit costs of the firm are $______________. 2. If the owner could earn 15% annually on the money she has invested in the firm, the economic profit of the firm would be ______________ (when revenue is $450,000). 3. The implicit costs are $______________. 4. The firm's accounting profit is $______________. 5. The firm earns an economic profit of $______________.
A movement from point N to point L would represent
A. an increase in both consumer goods and capital goods.
B. a decrease in both consumer goods and capital goods.
C. an increase in consumer goods, but a decrease in capital goods.
D. an increase in capital goods, but a decrease in consumer goods.
Figure 5-13
In Figure 5-13, the consumer can afford any combination of X and Y represented by a point
a.
on line AB only.
b.
on or below line AB.
c.
on or above line AB.
d.
anywhere on the graph.