If the Supply of Another Input Used Decreases, the Marginal

question 4

Multiple Choice

If the supply of another input used decreases, the marginal product of labor can:

• A)decrease, decreasing the supply of labor.
• B)increase, increasing the demand for labor.
• C)decrease, increasing the demand for labor.
• D)increase, increasing the supply of labor.

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Definitions:

Economic Profits

Profits calculated as total revenues minus explicit and implicit costs, differing from accounting profits by taking into account opportunity costs.

Marginal Cost

The escalation in total expenses incurred from creating an additional unit of a product or service.

Excess Capacity

The situation where a firm has resources that are not being fully utilized, often leading to inefficiency and increased costs.

Monopolistic Competitor

A market structure where many firms sell products that are similar but not identical, allowing them some power to set prices due to product differentiation.