After Some Point Successive Equal Increases in a Variable Factor

question 292

Multiple Choice

After some point successive equal increases in a variable factor of production, when added to a fixed amount of inputs, will result in smaller increases in output. This is known as

• A) the long run.
• B) the law of diminishing marginal product.
• C) marginal physical product.
• D) short run average cost.

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Definitions:

Productivity Growth

The increase in the efficiency of production, measured by the amount of goods and services produced per unit of input.

Unionized Workers

Employees who are members of a union, which is an organized association formed to protect and further their rights and interests.

Substitution Effect

The economic understanding that as prices rise or income decreases, consumers will replace more expensive items with less costly alternatives.

Income Effect

The change in an individual's or economy's purchasing power due to a change in income, affecting the quantity of goods and services bought.