The law of decreasing returns states that as a firm uses more of a _____
A) fixed input, with a given quantity of variable inputs, the marginal product of the fixed input eventually decreases.
B) variable input, total output will increase indefinitely.
C) variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases.
D) variable input, output will begin to fall immediately.
E) fixed input and a variable input, the marginal product of the fixed input and the marginal product of the variable input both decrease.
Answer: C) variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases.
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Refer to Figure 11-2. Diminishing returns to labor set in
A) after L1. B) after L2. C) after L3. D) immediately.
When shopping you notice that a pair of jeans costs $20 and that a tee-shirt costs $10 . You compute the price of jeans relative to tee-shirts
a. The dollar price of jeans and the relative price of jeans are both nominal variables. b. The dollar price of jeans and the relative price of jeans are both real variables. c. The dollar price of jeans is a nominal variable; the relative price of jeans is a real variable. d. The dollar price of jeans is a real variable; the relative price of jeans is a nominal variable.