"Marginal cost eventually increases because of the law of diminishing returns." True or false? Explain
What will be an ideal response?
The statement is true. The law of diminishing returns means that each additional worker produces a successively smaller addition to output. So to get an additional unit of output, ever more workers are required. Because more workers are required to produce one additional unit of output, the cost of the additional unit of output—marginal cost—must increase.
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Which of the following statements concerning Keynesian ISLM analysis is TRUE?
A) For a given change in taxes, the IS curve will shift less than for an equal change in government spending. B) Changes in net exports arising from a change in interest rates causes a shift in the IS curve. C) A fall in the money supply shifts the LM curve to the right. D) Expansionary fiscal policy will cause the interest rate to fall.
What is the counter-intuitive solution to a mixed strategy?
A) Player A makes Player B indifferent between its strategy choices. B) Player A makes itself indifferent between its strategy choices. C) Player A changes the rules of the game. D) There are no mixed strategies in most games.