Which of the Following Describes a Difference Between the Marginal

question 228

Multiple Choice

Which of the following describes a difference between the marginal product of labour and the marginal revenue product of labour?

• A) The marginal product of labour declines as each additional worker is hired because of the law of diminishing returns. The marginal revenue product of labour declines as each additional worker is hired because of diseconomies of scale.
• B) The marginal product of labour declines as each additional worker is hired because of the law of diminishing returns. The marginal revenue product increases as each additional worker is hired because of increases in the productivity of labour.
• C) The marginal product of labour is inelastic. The marginal revenue product of labour is elastic.
• D) The marginal product of labour measures the change in output as additional workers are hired. The marginal revenue product measures the change in revenue as additional workers are hired.

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Definitions:

Acquisition Differential

The difference between the purchase price of an acquired company and the sum of its net assets' fair values.

Retained Earnings

The portion of a company's profit not distributed to shareholders as dividends but kept in the company to reinvest in its core business or to pay debt.

Cost Method

An accounting approach for investments, outlining that an investment is recorded at its acquisition cost, adjusting for any dividends received.

Deferred Tax Asset

An accounting term representing an asset that may be used to reduce any future tax liability originating from temporary timing differences between the accounting and tax treatment of transactions.