The point of saturation occurs when a firm
A) has total returns equal to zero.
B) first encounters negative marginal product.
C) first experiences positive marginal product.
D) maximizes its total returns.
Answer: B
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In the simple circular flow model
A) businesses buy labor services from households, but supply other factors of production themselves. B) households spend their entire income on consumer products. C) profits are a type of income that is not received by households. D) households spend the income they receive from labor services but save the income they receive from selling the other factors of production.
A positive statement is
A) about what ought to be. B) about what is. C) the result of a model's normative assumptions. D) valid only in the context of a model with simple assumptions.