When Labor Is the Only Input to the Production Function

question 53

Multiple Choice

When labor is the only input to the production function, why must it be true that when the marginal product of labor is greater than the average product of labor, the average product of labor is increasing and vice versa?

• A)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
• B)When the marginal product of labor is below the average product of labor, an additional unit of labor will produce a greater marginal product than average, thus raising the average.
• C)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a smaller marginal product than average, thus reducing the average.
• D)When the marginal product of labor is above the average product of labor, an additional unit of labor will produce a zero marginal product.

Understand the concepts of absolute and comparative advantage in international trade.

Analyze the effects of trade on consumer and producer surplus in different markets.

Determine the conditions under which countries will engage in trade.

Calculate opportunity costs and understand their role in trade decisions.

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Definitions:

Interpret

To explain or provide the meaning of something, often involving analysis of data or information to derive understanding or conclusions.

Years

A unit of time used in various financial calculations, such as the amortization of assets or the term of investments.

Retired

Indicates assets taken out of service or policies terminated.

Unamortized Discount

The portion of the bond discount that has not yet been expensed in the income statement over the bond's life.