As a Result of a Labeling Mistake at the Chemical

question 171

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

• A)an increase in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
• B)an increase in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.
• C)a decrease in the marginal productivity of her remaining land and an increase in the marginal productivity of her labor.
• D)a decrease in the marginal productivity of her remaining land and a decrease in the marginal productivity of her labor.

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Definitions:

Current Cost

The cost to replace an asset or settle a liability at the current market rate, as opposed to its historical purchase price or book value.

Average Cost

A calculation that divides the total cost of goods available for sale by the total number of units available for sale, determining the cost per unit.

Exchange Rates

The rate at which one currency can be exchanged for another, dictating how much of one currency you can get for a unit of another currency.

Foreign Supplier

A business based in another country that provides goods or services to companies or consumers in a different nation.