Table 2.4 -The Firm Depicted in Table 2.4 Is Likely to Face

question 38

Multiple Choice

Table 2.4
-The firm depicted in Table 2.4 is likely to face diminishing returns because

• A) the amount of fertilizer can only be increased to 5.
• B) land and fertilizer are both fixed.
• C) land and fertilizer are both variable.
• D) land is fixed but fertilizer is variable.

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Definitions:

Income Elasticity

Measures how the demand for a product or service changes in response to changes in consumer income.

Positive Elasticity

Occurs when the demand for a product increases as the price increases, indicating a direct relationship between price and demand.

Inelastic Demand

A situation where the demand for a product does not change significantly with a change in the price of that product.