Which of the Following Statements Is True

question 76

Multiple Choice

Which of the following statements is true?

• A)The average product of labour is at its maximum when the average product of labour equals the marginal product of labour.
• B)The average product of labour is at its minimum when the average product of labour equals the marginal product of labour.
• C)The average product of labour tells us how much output changes as the quantity of workers hired changes.
• D)Whenever the marginal product of labour is greater than the average product of labour the average product of labour must be decreasing.

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Definitions:

Coase Theorem

The Coase Theorem posits that if trade in an externality is possible and there are no transaction costs, bargaining will lead to an efficient outcome regardless of the initial allocation of property.

Externality Problems

Occurrences in which the production or consumption of goods and services imposes costs or benefits on third parties not involved in the transaction.

Government Intervention

The involvement by government in the market to influence the allocation of resources and distribution of income.

Coase Theorem Solution

A theory suggesting that if trade or negotiation over property rights is allowed without cost, parties can reach an agreement regarding the allocation of resources regardless of the initial allocation.