So Long as a Firm Is Enjoying Increasing Marginal Returns,a

question 38

Multiple Choice

So long as a firm is enjoying increasing marginal returns,a one unit increase in output will cause marginal costs to ________ and total costs to ________.

• A)increase; increase
• B)decrease; increase
• C)increase; decrease
• D)decrease; decrease

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Definitions:

Inputs Demand

The desire or requirement for factors of production, like labor and capital, that businesses need to produce goods or services.

Demand for Outputs

The quantity of goods and services that consumers and businesses are willing and able to purchase at various prices during a certain period of time.

Marginal Revenue Product

The additional revenue generated from employing one more unit of a factor of production.

Marginal Product

The extra output that comes from increasing a particular input by one unit, while keeping all other inputs unchanged.