If Capital Is a Variable Input in a Production Process,the

question 96

Multiple Choice

If capital is a variable input in a production process,the law of diminishing marginal returns implies that

• A)total product is minimized.
• B)capital's marginal product is positive and less than one.
• C)total product is maximized.
• D)marginal product of capital eventually decreases.
• E)marginal product of capital is constant.

---

Definitions:

Monopoly Power

The ability of a company or entity to control the price and supply of a product or service, due to the lack of competition in the market.

Long-run Equilibrium

A state in which all factors of production and costs are variable, and economic agents have fully adjusted to any economic changes, leaving no incentives for further adjustments.

Minimum Average Cost

The lowest point on the average cost curve, signifying the most efficient scale of operation for a firm.

Decreasing Cost

Decreasing cost refers to a situation where costs fall as the scale of production increases, often due to efficiencies or benefits gained from economies of scale.