1. The law of diminishing returns indicates that: a. as extra units of a variable resource are added to a fixed resource the marginal product will decline beyond some point. b. because of economies and diseconomies of scale a competitive firm's long-run average cost curve will be U-shaped. c. the demand for goods produced by purely competitive industries is down sloping. d. beyond some point the extra utility derived from additional units of a product will yield the consumer smaller and smaller extra amounts of satisfaction. Why do marginal costs tend to rise, and marginal benefits tend to fall? 2. Is it possible to avoid Diminishing Marginal Return? Why? 3. Suppose that the Law of Diminishing Returns sets in immediately (that is, there is no range of output over which the Division of Labor holds). What would the short run marginal cost, average cost, and average variable cost curves look like? Explain. 4. Which situation below describes the increasing returns stage of the production function? a. Hiring one more tailor results in three more suits produced per hour. b. Hiring one more baker results in the same output because there is now less than one oven available per baker. c. Buying one more office computer causes there to be more computers than workers. d. Extending the workday results in more tired and less productive workers
1. The law of diminishing returns indicates that:
a. as extra units of a variable resource are added to a fixed resource the marginal product will decline beyond some point.
b. because of economies and diseconomies of scale a competitive firm's long-run average cost curve will be U-shaped.
c. the demand for goods produced by purely competitive industries is down sloping.
d. beyond some point the extra
Why do marginal costs tend to rise, and marginal benefits tend to fall?
2. Is it possible to avoid Diminishing Marginal Return? Why?
3. Suppose that the Law of Diminishing Returns sets in immediately (that is, there is no range of output over which the Division of Labor holds). What would the short run marginal cost, average cost, and
4. Which situation below describes the increasing returns stage of the production function?
a. Hiring one more tailor results in three more suits produced per hour.
b. Hiring one more baker results in the same output because there is now less than one oven available per baker.
c. Buying one more office computer causes there to be more computers than workers.
d. Extending the workday results in more tired and less productive workers
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