Consider a Basket-Producing Firm with Fixed Capital

question 143

Multiple Choice

Consider a basket-producing firm with fixed capital.If the firm can produce 24 baskets per day with 3 workers and then increases production to 36 baskets per day with 4 workers,then which of the following statements is definitely true?

• A)The firm has passed the point of diminishing marginal productivity.
• B)The marginal productivity of the fourth worker is 9.
• C)The firm has passed the point of diminishing average productivity.
• D)With 4 workers,the average product is greater than the marginal product.
• E)With 4 workers,the marginal product is greater than the average product.

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Definitions:

Stocks

Shares of ownership in a company that represent a claim on the company's earnings and assets.

Probability

The measure of the likelihood that an event will occur, often expressed as a number between 0 and 1.

Risk Premium

Higher expected rates of return that compensate investors in risky assets. In equilibrium, differences in the rate of return reflect differences in the riskiness of an investment.

Low Risk Asset

An investment that is generally expected to yield returns with relatively lower volatility or risk of loss.