Law of Diminishing Marginal Returns

What is the name given to the period when quantities of land and capital are fixed?

• Fixed capital formation

• Time lag

• Short run

• Long run

Which of the following describes an eventual decline in the productivity of factor inputs as additional units of variable factors are added to fixed resources?

• Law of diminishing marginal utility

• Law of diminishing marginal returns

• Laffer curve

• Law of diminishing total product

What happens to total product when marginal product becomes negative?

• Increases

• Decreases

• Remains unchanged

• Reaches a peak

What is the average product with 1 labourer?

• 1 unit

• 4 units

• 5 units

• 10 units

What is the total product with 2 labourers?

• 10 unit

• 10.5 units

• 11 units

• 11.5 units

What is the marginal product with 3 labourers?

• 5 unit

• 5.5 units

• 6 units

• 7 units

Which of the following statements is not true?

• Marginal costs decline and rise from a point of diminishing returns

• Marginal product increases and falls from a point of diminishing returns

• There are no fixed inputs/factors of production in the long run

• All are true

The law of diminishing marginal returns is not relevant to the long run because

• the quantity of labour is variable in the long run

• in the long run, no factor inputs are fixed

• in the long run, no factor inputs are variable

• the law of diminishing marginal returns applies in the long run

The marginal cost curve best resembles a

• inverted Nike Swoosh

• V

• U

• Nike Swoosh

All of the below are Factors of Production EXCEPT

• Land

• Enterprise

• Labour

• Government

• Capital