Use the data in the table above and suppose that labor is the only variable factor of production. When 122 dozen donuts are produced at Decent Donuts, the MC curve
A) has a positive slope.
B) shows the effect of increasing marginal returns.
C) Both answers A and B are correct.
D) Neither answer A nor B is correct.
A
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When the marginal physical product is falling
A) marginal cost is rising. B) average fixed costs are rising. C) total costs are falling. D) average variable costs are falling.
A package delivery service uses vans and employees to deliver the maximum number of packages given a fixed budget. The last van added 600 packages to total output, while the last employee added 500 packages. If vans cost $400 per week and employees earn $300 per week, the firm
A. could deliver more packages with the same budget by using more employees and fewer vans. B. could deliver more packages with the same budget by using more vans and fewer employees. C. should use more vans and fewer employees because the last dollar spent on vans added more to total output than the last dollar spent on employees. D. is delivering the maximum number of packages given the fixed budget. E. both b and c