The law of diminishing marginal returns states:
a) As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes.
b) As a firm uses more of a variable factor or production, total product eventually decreases.
c) As the size of a firm?s plant increases, average cost eventually decreases.
d) As the size of a plant increases, marginal product eventually decreases.
e) As a firm uses more of a variable factor of production, its average cost eventually decreases.
Ans: a) As a firm uses more of a variable factor of production, with a given quantity of the fixed factor of production, the marginal product of the variable factor eventually diminishes.
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Answer the following statement true (T) or false (F)
Banks create money in the economy by:
A. charging higher interest on savings than loans. B. charging higher interest on loans than savings. C. loaning out all of their deposits to borrowers. D. loaning out part of each deposit, which will be redeposited by someone else.