The correct option that defines the level of input at which firm realizes the diminishing marginal returns.
Answer to Problem 6MCQ
Option b is correct.
Explanation of Solution
Explanation for correct option:
b.
At 4 workers, the production should be 40 if 1 worker is producing output of 10 but the output produced is 36. For instance, if 1 labor is producing 10 products then it does not mean that 6 labor will produce 60 products. Therefore, option b is correct
Explanation for incorrect options:
a.
Diminishing marginal returns are present in the given case. Therefore, option a is incorrect.
c.
At 3 workers, the output produced is 30 which is appropriate. At this level firm will not realize the diminishing marginal returns if 3rd worker is added. Therefore, option c is also incorrect.
d.
At 5 workers, the additional output is 4 which is less as compared to the output level when 4th worker is added to the firm. Therefore, option d is incorrect.
e.
At 6 workers, the additional output is 3 which is less as compared to the output level when 5th worker is added to the firm.. Therefore, option e is incorrect.
Factor of production: Factor of production refers to the components or the resources that are required for producing intangible or tangible products.
Factor income: Factor income refers to returns received by the producer for inserting each factor of production as an input.
Chapter 13R Solutions
Krugman's Economics For The Ap® Course
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