Assuming a Firm Uses Capital and Labor to Produce Output

question 46

Multiple Choice

Assuming a firm uses capital and labor to produce output, which of the following is not always a true statement?

• A)Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to greater output.
• B)Assuming the marginal products of labor and capital are less than zero, doubling the inputs of capital and labor will lead to less output.
• C)Assuming the marginal products of labor and capital are greater than zero, doubling the inputs of capital and labor will lead to double the output.
• D)Assuming the marginal products of labor and capital are greater than zero, doubling the input of capital and keeping the input of labor constant will lead to greater output.

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Definitions:

Trade

The exchange of goods or services between individuals, firms, or countries.

Consumer Surplus

The discrepancy between what consumers are prepared and able to spend on a product or service and the actual amount they end up paying.

Tariff

A tax imposed by a government on goods and services imported from other countries, used to control trade volumes and protect domestic industries.

Trade

The exchange of goods, services, or both between parties, which can occur domestically or internationally.