What Is True of Marginal Cost When Marginal Returns Are

question 27

Multiple Choice

What is true of marginal cost when marginal returns are decreasing?

• A)It is negative and increasing.
• B)It is negative and decreasing.
• C)It is positive and increasing.
• D)It is positive and decreasing.
• E)It is positive and has a constant slope.

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Definitions:

Price Level

The average of current prices across the entire spectrum of goods and services produced in the economy, often used as a measure of inflation.

Consumption

The act of using goods and services for personal needs or desires, a basic economic activity measured to assess the health and growth of an economy.

Keynesian Economics

An economic theory stating that government intervention can stabilize the economy through fiscal and monetary policy.

Wage Flexibility

The ease with which wages can adjust to match the supply and demand for labor, helping in the correction of labor market imbalances.