Consider the following short-run production function: q = 5L2 - 1/3 L3. At what level of L do diminishing marginal returns begin? At what level of L do diminishing returns begin?
What will be an ideal response?
MP = 10L - L2. Marginal product peaks when L = 5 and equals zero when L = 10. Thus, diminishing marginal returns begin when L = 5, and diminishing returns begin when L = 10.
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Which of the following events could shift the demand curve for gasoline to the left?
a. The income of gasoline buyers rises, and gasoline is a normal good. b. The income of gasoline buyers falls, and gasoline is an inferior good. c. Public service announcements run on television encourage people to walk or ride bicycles instead of driving cars. d. The price of gasoline rises.
Answer the following questions true (T) or false (F)
1. The values of real GDP and real GNP are almost the same for the United States. 2. The values of real GDP and real GNP are almost the same in countries where a significant fraction of domestic production takes place in foreign-owned firms. 3. Disposable personal income is equal to personal income minus personal tax payments.