Diminishing marginal returns refers to the fact that
a. holding other inputs constant, additional increases in labor lead to smaller changes in output.
b. holding other inputs constant, additional increases in labor lead to lower output.
c. additional increases in labor always lead to smaller changes in output
d. the returns to labor fall as real wages rise.
A
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Suppose a monopoly producer is also a monopsonist in the labor market. Demand for the output is p = 100 - Q. The production function is Q = L, and the labor supply curve is w = 10 + L. How much labor does the firm hire? What wage is paid?
What will be an ideal response?
The difference between absolute and comparative advantage is that:
a. absolute advantage refers to input cost, while comparative advantage refers to opportunity cost. b. absolute advantage refers to opportunity cost, while comparative advantage refers to input cost. c. absolute advantage is applicable only to individuals, and comparative advantage is applicable only to countries. d. absolute advantage is applicable only to countries, and comparative advantage is applicable only to individuals. e. absolute advantage is applicable to international trade, while comparative advantage applies to exchange of goods in the domestic market.