In the Short- Run, a Firm Increases Its Labour Input

question 86

Multiple Choice

In the short- run, a firm increases its labour input from 10 to 11 workers and output increases from 500 to 560 units. Which of the following statements is correct?

• A)The marginal product of the 11th worker is 50.
• B)The average product of 11 workers is 60.
• C)The marginal product of the 11th worker is 60.
• D)The average product of 11 workers is 50.

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Definitions:

Inverted-U Theory

A theoretical concept suggesting that a variable's effect on a particular outcome increases to a point but then begins to decrease as the variable continues to increase.

Market Structures

The organizational and other characteristics of a market that significantly affect the nature of competition and pricing within that market.

Retained Earnings

The portion of net income that is kept by the company instead of being paid out as dividends to its shareholders.

Venture Capital

Financing provided by investors to startup companies and small businesses with strong growth potential.