The law of diminishing returns to an input says that if other inputs are fixed
A. the variable input will eventually decrease with more output.
B. output eventually will decrease with increases of the variable input.
C. revenue will eventually decrease with increases in the variable input.
D. change in output will eventually decrease with increases in the variable input.
Answer: D
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Amy can produce either 5000 pounds of cheese or 20 cars per year. Mike can produce either 5000 pounds of cheese or 10 cars per year. By the principle of comparative advantage, Mike should specialize in producing
A. cars. B. neither cheese nor cars. C. both cheese and cars. D. cheese.
The figure above shows how the PPF for cell phones and new cell-phone factories can expand. In the figure, if the economy produced 4 million cell phones using the resources efficiently, the PPF would
A) expand farther than shown in the figure. B) expand along the vertical axis and not along the horizontal axis. C) expand, but not as far as shown in the figure. D) expand evenly along both axes. E) not expand.
Cartels are typically subject to cheating by their members because
A) if the other firms stick to the agreement, a firm can increase its profits by cutting its price. B) barriers to entry do not exist so new entrants will join. C) the U.S. Justice Department will punish any cartel agreement before the cartel has had a chance to operate. D) product differentiation allows the firms in the cartel to cheat.
The longer you have to wait to receive a payment,
A) the lower the interest rate you will charge on the payment. B) the more you are willing to discount the payment. C) the greater value it will have to you. D) the less value it will have to you.