The law of diminishing marginal returns:
a. states that each and every increase in the amount of the variable factor employed in the production process will yield diminishing marginal returns
b. is a mathematical theorem that can be logically proved or disproved
c. is the rate at which one input may be substituted for another input in the production process
d. none of the above
d
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How does the demand curve facing a home monopolist compare in a no-trade situation to a situation in which a quota protects the monopolist's output?
a. They are identical. b. The quota-protected demand curve lies to the right of the no-trade demand curve. c. The quota-protected demand curve lies to the left of the no-trade demand curve. d. The no-trade demand curve is perfectly price elastic at the world price; the quota-protected demand curve has a negative slope.
The economic analysis of monopolistic competition shows that market forces eliminate profits in the long run. However, it is possible for a firm to continue to earn economic profits if the firm
A) adopts new technologies that enable it to lower its cost of production. B) expands its marketing budget. C) reduces its price to expand its market. D) expands its product offerings to appeal to a wider range of consumers.