The law of diminishing marginal productivity states that As you expand output, y

Question

The law of diminishing marginal productivity states that

As you expand output, your marginal productivity eventually increases

As you expand output, your marginal productivity eventually declines

As you expand output, the total product eventually increases

None of the above

QUESTION 2 Which one of the statements is true?

Diminishing returns is a long-run concept while decreasing returns to scale is a short-run concept.

Diminishing returns is a short-run concept while decreasing returns to scale is a long-run concept.

Diminishing returns is a both short and long-run concept while decreasing returns to scale is a short-run concept.

Diminishing returns is a long-run concept while decreasing returns to scale is a short and long-run concept.

QUESTION 3 Which of the following statements describes the presence of diminishing returns? All else equal,

Marginal product is constant as output increases

Marginal product is falling as output increases

Marginal product is rising as output increases

Marginal product is zero 1 points QUESTION 4 The term “bottleneck” refers to when increasing amounts of variable inputs must share a fixed input. “fixity” of some factor of production None of the above Both a and b 1 points QUESTION 5 When a firm is experiencing increasing marginal costs, it implies A constant marginal productivity decreasing average costs decreasing marginal productivity increasing marginal productivity 1 points QUESTION 6 If average cost is decreasing, then marginal cost Must be increasing Must be greater than average cost Must be less than average cost None of the above 1 points

QUESTION 7 Marginal productivity is The total output associated with total inputs The total output associated with extra inputs The extra output associated with total inputs The extra output associated with extra inputs 1 points

QUESTION 8 Economies of scale are also known as Increasing returns to scale Decreasing returns to scale Constant returns to scale None of the above 1 points

QUESTION 9 All of these could be sources of economies of scale except Investment in more efficient technology Specialization A bottleneck procedure Discounts on bulk purchase of inputs 1 points

QUESTION 10 Diseconomies of scale are also known as Increasing returns to scale Decreasing returns to scale Constant returns to scale None of the above 1 points

QUESTION 11 If your long-run costs exhibit increasing returns to scale, securing big orders leads you to Increase average costs Reduce average costs Keep the average costs constant None of the above 1 points

QUESTION 12 As a table manufacturing company produces more tables, the average total cost of each table produced increases. This could be because: Total fixed costs are decreasing as more tables are produced There are economies of scale There are diseconomies of scale Total variable cost is decreasing as more tables are produced. 1 points

QUESTION 13 Eddys’ Electronics found that instead of producing a dvd player and a gaming system separately, it is cheaper to incorporate dvd playing capabilities in their new version of the gaming system. Eddy’s is taking advantage of Economies of Scale Learning curve Economies of Scope Decreasing marginal costs 1 points

QUESTION 14 What is a synergy or cost complementarity? the cost of producing different products offered by separate companies would be more expensive when produced by one company the cost of producing different products offered by separate companies is higher than when produced by one company the cost of producing different products offered by separate companies is equal to when the products are produced by one company None of the above 1 points

QUESTION 15 What are economies of scope? the cost of producing two products jointly by one firm is more than the cost of producing them separately the cost of producing two products jointly by one firm is lesser than the cost of producing them separately the cost of producing two products jointly by one firm is equal to the cost of producing them separately none of the above

Explanation / Answer

1.) The law of diminishing marginal productivity states that

Right answer is :

As you expand output, your marginal productivity eventually declines

As level of output is increased, diseconomies of scale starts outweighing economies of scale. Hence, marginal productivity of output starts declining.

QUESTION 2 Which one of the statements is true?

Right answer is :

Diminishing returns is a short-run concept while decreasing returns to scale is a long-run concept.

Diminishing returns occur where one factor is fixed and other variable and decreasing returns to scale occurs in long run when all factor of production are variable.

QUESTION 3 Which of the following statements describes the presence of diminishing returns? All else equal,

Right answer is :

Marginal product is falling as output increases

In case of diminishing returns, marginal productivity of output falls.

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