The marginal physical product of labor increases when more laborers are added to production, although it eventually falls as laborers are continually added. The explanation for the initial increase is the
a. low wage rates at the beginning of production
b. more skilled labor at the beginning of production
c. marginal revenue product is less than the marginal physical product
d. marginal revenue product decreases at every production level
e. gains from the division of labor and specialization
E
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The long-run average cost curve of a natural monopoly
A) is positively sloped until it crosses the demand curve. B) intersects the demand curve while it is negative sloped. C) intersects the demand curve while it is positively sloped. D) is the natural monopoly's supply curve. E) is the same as the natural monopoly's demand curve.
The above figure shows the market for winter jackets. In an effort to keep the nation warm, the president places a price ceiling of $100 in the market for winter jackets
When the price ceiling is in place and taking account of the resources lost in search, consumer surplus ________ and producer surplus ________ compared to the equilibrium before the price ceiling was imposed. A) decreases; increases B) decreases; decreases C) increases; increases D) increases; decreases E) does not change; increases