The "Law of Diminishing Returns" states that
A) additional inputs will reduce output.
B) additional inputs will decrease average productivity.
C) the supply of inputs is becoming scarce.
D) additional inputs will lead to less additional output.
D
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Answer the following statement(s) true (T) or false (F)
1. A worker will not supply any labor when the wage rate is less than the marginal value of leisure. 2. The substitution and income effects of a wage increase both cause consumption to rise. 3. An individual's labor supply can become backward bending because high wages tend to magnify substitution effects. 4. A worker's labor supply may either rise or fall when nonlabor income increases, depending on whether the substitution effect or the income effect dominates. 5. A worker's labor supply curve is upward sloping only if the substitution and labor income effects are in the same direction.
The market mechanism:
a) Works through central planning by the government. b) Is very inefficient since consumers cannot communicate directly with producers. c) Uses prices as a means of communication between consumers and producers. d) Eliminates market failures created by the government.