The Production Function May Have the Same Marginal Products, Yet

question 69

Multiple Choice

The production function may have the same marginal products, yet the production constant term, A, may differ. Today, most economists believe this is caused by:

• A) differences in technology.
• B) differences in social efficiency of production (factors affecting production, such as policies, work ethic, education, institutional infrastructure, or cultural differences).
• C) corruption and a poor regulatory climate.
• D) gender bias.

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Definitions:

Market Price

The present cost at which a product or service is available for purchase or sale in a specific market.

Optimal Short-Run Output

The level of production that maximizes profit or minimizes loss in the short term.

Market Price

The current price at which an asset or service can be bought or sold, determined by the supply and demand dynamics in the market.

Downward-Sloping Demand Curves

A graphical representation indicating that as the price of a good or service decreases, the quantity demanded increases, and vice versa.