Marginal Productivity Analysis Shows That a Drop in the Price

question 139

Multiple Choice

Marginal productivity analysis shows that a drop in the price of the product will cause input use to

• A)increase.
• B)decrease.
• C)stay the same.
• D)The information is insufficient to provide an answer.

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Definitions:

Marginal Analysis

An examination of the additional benefits of an activity compared to the additional costs incurred by that same activity.

Additional Costs

Expenses that are not initially planned or anticipated, which can arise during the course of a project or as part of an operation.

Economic Models

Simplified representations of complex economic processes used to predict future economic activity.

Simplifying Assumptions

Rational approximations or conditions made to simplify complex systems or models so that they are easier to analyze or understand.