A Firm Produces Its Product Using Both Capital and Labor

question 76

Multiple Choice

A firm produces its product using both capital and labor.When it does not change its capital usage,but doubles its labor input,its output increases by less than 50%.Which of the following is the most likely explanation of this finding?

• A) the principle of opportunity cost
• B) the principle of diminishing returns
• C) the marginal principle
• D) the spillover principle

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