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Chapter 8: Problem 27

The law of diminishing returns may also be called the law of _____. a) diminishing marginal output b) diminishing positive returns c) negative returns d) increasing returns

Short Answer

Expert verified
The law of diminishing returns may also be called the law of \(diminishing \; marginal \; output\).

Step by step solution

01

Understand the Law of Diminishing Returns

The law of diminishing returns, also known as the law of diminishing marginal returns, is an economic concept stating that as additional units of a variable input (such as labor) are added to a fixed input (such as capital), the marginal product of the variable input will eventually decrease.
02

Analyze the Options

Now, we will go through the options to find the term that matches this concept: a) diminishing marginal output b) diminishing positive returns c) negative returns d) increasing returns
03

Choose the Correct Option

From the given options, the term "diminishing marginal output" (a) best represents the Law of Diminishing Returns, as it refers to the decrease in marginal output or product of the variable input when more units of that input are added. Hence, the correct answer is: a) diminishing marginal output

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Most popular questions from this chapter

In Figure 1, if you want to produce an output of 100 , in the long run you will choose a plant whose size is represented by _____. a) \(\mathrm{ATC}_{1}\) b) \(\mathrm{ATC}_{2}\) c) \(\mathrm{ATC}_{3}\) d) \(\mathrm{ATC}_{4}\) e) \(\mathrm{ATC}_{5}\)

\(\mathrm{Al}\) and George's used car lot has total revenue of \(\$ 5\) million, fixed costs of \(\$ 8\) million, and variable costs of \(\$ 4\) million. In the short run the firm will _____, and in the long run it will _____. a) shut down, go out of business b) shut down, stay in business c) operate, stay in business d) operate, go out of business

As output rises, the difference between ATC and AVC _____. a) rises b) stays the same c) falls

When \(\mathrm{MC}\) is rising but still below ATC, then _____. a) ATC is declining b) ATC is constant c) ATC is rising d) there is no way of determining what ATC is doing

The decision to shut down is made in _____. a) both the short run and the long run b) neither the short run nor the long run c) the long run d) the short run
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