When EP/P* Rises

question 63

Multiple Choice

When EP/P* rises

• A) IM will rise.
• B) IM will fall.
• C) IM may rise or fall.
• D) IM is not affected.
• E) IM and P* will both rise.

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Definitions:

Marginal Costs

The incremental cost involved in producing one more unit of a product or service.

Learning Curve

The concept that people improve efficiency and decrease cost over time as they gain experience in a particular task or operation.

Marginal Productivity

The additional output that is produced by using one more unit of a particular input while keeping other inputs constant.

Marginal Cost

The additional expense incurred from producing and selling one more unit of a good or service.