How Much a Firm Changes Its Output in Response to a Price

question 40

Multiple Choice

How much a firm changes its output in response to a price change is captured by the firm's

• A)production function.
• B)cost function.
• C)function of diminishing returns.
• D)supply curve.
• E)demand curve.

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Definitions:

Diminishing Returns

An economic concept indicating that as more investment is made in a particular area, the rate of profit from that investment, after a certain point, starts to decline.

Marginal Product

The additional output produced by using one more unit of a particular input, while holding other inputs constant.

Marginal Product

The increase in output that results from employing one additional unit of a factor of production, while holding other factors constant.

Additional Worker

An employee hired to increase the workforce, contributing to higher production or service capacity.