As the Quantity of Land Used Increases,its Value of Marginal

question 136

Multiple Choice

As the quantity of land used increases,its value of marginal product

• A) decreases and then eventually increases.
• B) increases and then eventually decreases.
• C) remains constant.
• D) might increase, decrease, or remain constant depending if the rent for the land rises, falls, or does not change.
• E) The premise of the question is wrong because land does not have a value of marginal product.

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Definitions:

Negative Externality

A cost imposed without compensation on third parties by the production or consumption of sellers or buyers. Example: A manufacturer dumps toxic chemicals into a river, killing fish prized by sports fishers. Also known as an external cost or a spillover cost.

Spillover Cost

A cost incurred by someone who is not a direct participant in a transaction, often referring to negative externalities resulting from economic activities.

Allocative Efficiency

occurs when resources are distributed in a manner that results in the optimal combination of goods and services produced to match consumer preferences.

Productive Efficiency

The production of a good in the least costly way; occurs when production takes place at the output level at which per-unit production costs are minimized.