One Reason That Variable Factors of Production Tend to Show

question 25

Multiple Choice

One reason that variable factors of production tend to show diminishing returns in the short run is that:

• A)too much capital equipment is idle.
• B)there are more and more workers using a fixed amount of productive resources.
• C)the firm has become too large to effectively manage workers.
• D)the cost of hiring additional workers increases as firms seek to hire more.

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Definitions:

Marginal Cost

The increase in cost resulting from the production of an extra unit of a good or service.

Output Level

The total amount of goods or services produced by a business or economy during a specific period.

Profit Maximizing

The process by which a company determines the price and output level that generates the maximum profit.

Marginal Cost

The supplementary expense incurred from manufacturing one more unit of a good or service.