4.1.4.3 Law of Diminishing Marginal Returns VIDEO NOTES

What defines the short-run in business operations?

• Period with no fixed factors

• Time when all factors are variable

• Phase with at least one fixed factor

• Stage with only variable factors

Which factors are generally fixed for businesses in the short-run?

• Labor and capital

• Capital and land

• Technology and land

• Labor and technology

What happens to total product as more labor is added in the short-run?

• Decreases steadily

• Remains constant

• Increases then decreases

• Increases indefinitely

How is marginal product calculated?

• Sum of all products divided by total workers

• Change in total product per additional worker

• Total product multiplied by number of workers

• Total product divided by number of workers

At what point does the marginal product curve intersect the average product curve?

• At its highest point

• It does not intersect

• At its starting point

• At its lowest point

What indicates the onset of diminishing returns in a production process?

• Total product decreases

• Marginal product starts to fall

• Marginal product remains constant

• Marginal product begins to rise

What role does specialization play in increasing marginal product?

• Decreases worker efficiency

• Reduces the need for fixed factors

• Enhances worker productivity

• Leads to overutilization of resources

Why does marginal product start to fall with the addition of more workers beyond a certain point?

• Due to reduced working hours

• Due to excessive specialization

• As a result of increased total product

• Because of insufficient fixed factors

When is total product maximized according to the law of diminishing returns?

• When total product starts to fall

• When average product is maximized

• When marginal product is at its peak

• When marginal product is zero

What does the shape of the total product curve indicate about production?

• It falls from the beginning

• It rises, peaks, and then falls

• It only rises

• It remains constant throughout