The Marginal Product of a Factor of Production

question 24

Multiple Choice

The marginal product of a factor of production

• A) is equal to the ratio of the amount of that factor of production to the amount of output produced.
• B) is equal to the amount of additional output that can be produced with one additional unit of each factor input.
• C) is equal to the amount of additional output that can be produced with one additional unit of that factor input, holding constant the quantities of the other factor inputs.
• D) always exceeds the average product of that factor input, holding constant the quantities of the other factor inputs.

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Definitions:

Effective Rate

Refers to the real rate of interest earned or paid on an investment, loan, or other financial product, adjusted for the effect of compounding over a given period.

Return Required

The minimum expected rate of return on an investment necessary for an investor to consider it worthwhile.

Interest-Bearing Note

A debt instrument that pays interest to the holder, typically issued at face value and redeemed at maturity for the same amount plus accrued interest.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations by comparing its interest expenses to its earnings before interest and taxes.