In a Firm, All Other Things Remaining the Same, If

question 36

Multiple Choice

In a firm, all other things remaining the same, if the material usage per unit of final product decreases to half of the current usage, then the firm will

• A) double the material productivity
• B) increase the multifactor productivity
• C) double the material productivity and increase the multifactor productivity
• D) decrease capital productivity
• E) have no effect on productivity.

---

Definitions:

Zero Economic Profits

A condition in perfect competition where firms earn just enough revenue to cover their total costs, leading to no supernormal profit in the long term.

Monopolistically Competitive

A market structure where many firms sell products that are similar but not identical, allowing for significant brand differentiation and some control over prices.

Long Run

A period in economics during which all factors of production and costs are variable, allowing for full adjustment to change.

Average Total Cost Curve

A graphical representation showing how average cost changes with changes in output.