Diminishing Marginal Returns Refers to a Situation Where the ________

question 79

Multiple Choice

Diminishing marginal returns refers to a situation where the ________ of an additional worker is less than the ________ of the previous worker.

• A)marginal cost;marginal cost
• B)average cost;average cost
• C)marginal product;marginal product
• D)average product;average product
• E)marginal product;average product

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Definitions:

Backward-Bending

A term often used in labor economics to describe the supply curve of labor, which can bend backwards at higher wage levels, indicating that higher wages can lead to a decrease in labor supply.

Substitution Effect

The economic principle that as the price of a good or service rises (or incomes decrease), consumers will replace pricier items with less costly alternatives, holding the utility derived from consumption constant.

Price Decreases

Price decreases occur when the cost of goods or services goes down, often due to factors like increased competition, lower demand, or decreases in production costs.

Income Effect

The effect of changes in either individual or economic income on the demand levels for goods or services.