If a Production Function Shows Declining Marginal Product of an Input

question 360

Multiple Choice

If a production function shows declining marginal product of an input as the quantity of the input increases, then the production function exhibits

• A) diminishing profitability.
• B) increasing returns to scale.
• C) increasing marginal product.
• D) decreasing marginal product.

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Definitions:

Aggregate Demand

The total demand for all goods and services in an economy at different price levels, within a given time period.

Tax Cuts

Reduction in tax rates intended to stimulate economic activity or achieve other policy goals.

Government Purchases

Spending on goods and services by local, state, and federal governments

Monetary Policy

The process by which a central bank or monetary authority manages the supply of money and interest rates to achieve macroeconomic objectives like controlling inflation, consumption, growth, and liquidity.