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:

Cumulative Weighted Average Expenditure

The sum of all expenditures over a period weighted by the time each amount was incurred, providing a means to calculate average costs or investments over that period.

Construction Loan

A short-term loan provided to finance the building of a property or real estate project, typically converting into a long-term mortgage upon completion.

Capitalized Cost

The total of all costs incurred to acquire an asset and prepare it for its intended use, often including the purchase price and costs of installation.

Freight

The transport of goods and cargo by land, air, or sea, often involving the payment of a fee for such service.