As a Result of a Labeling Mistake at the Chemical

question 526

Multiple Choice

As a result of a labeling mistake at the chemical factory, a farmer accidentally sprays weedkiller rather than fertilizer on half her land. As a result, she loses half of her productive farmland. If the property of diminishing returns applies to all factors of production, she should expect to see the marginal productivity of her remaining land

• A)increase.
• B)remain unchanged.
• C)decrease but remain positive.
• D)decrease and become negative.

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Definitions:

Current Ratio

A liquidity ratio that measures a company's ability to pay short-term obligations with its current assets over current liabilities.

Acid Test Ratio

A financial metric that assesses a company's ability to pay off its short-term liabilities with its quick assets (cash, marketable securities, and receivables).

Current Assets

Assets that are expected to be converted into cash within one fiscal year or one operating cycle, whichever is longer.

Current Liabilities

Short-term financial obligations that are due within one year or within the normal operating cycle of a business.