Assume Labour Is the Only Factor of Production in a Competitive

question 69

Multiple Choice

Assume labour is the only factor of production in a competitive product market.If there are increasing returns to scale then:

• A)marginal product of labour is constant
• B)marginal product of labour is decreasing
• C)marginal product of labour is increasing
• D)we cannot say without more information

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Definitions:

Producer Surplus

The difference between what producers are willing to accept for a good versus what they actually receive, essentially measuring the net benefit to producers from selling at a market price above their minimum acceptable price.

Government Policy

The actions or inactions taken by the governing body to address public issues, which can influence economic conditions, social welfare, and the regulatory environment.

Producer Surplus

The differentiation between the selling price sellers are willing to accept and the price they eventually get.

Government Policy

Strategies and measures adopted by a government to guide its actions in the pursuit of specific goals and objectives.