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    Hi, a few questions here to which there is no answer. Care to help out?

    1. Diminishing returns arise because

    A. additional men can be employed only at higher wage costs
    B. factors of production are imperfect substitutes for each other
    C. additional output can be sold only at a lower price
    D. technical progress is seldom neutral in its effects on factor productivities
    E. additional units of a good imply lower utility per unit

    I say, it is E. What do u guys think?

    2. In deriving the short run supply schedule for a firm, which one of the following is taken as given?

    A. the state of technology
    B. the number of consumers
    C. the number of suppliers
    D. the price of the good
    E. the quantities of all factors

    A is my choice.

    3. 'If constant amounts of a variable factor are added to fixed quantities of other factors, the marginal returns to the variable factor will eventually diminish.'

    This is a statement to the law of

    A. decreasing returns to scale
    B. diminishing marginal substitution
    C. diminishing marginal utility
    D. increasing costs
    E. variable proportions

    Uhm, this is confusing, it could either be A,B or C for me. Can u guys plz help out?


    4. A manufacturer's ability to increase his output in the short run will be greater

    A. the higher his capital-output ratio
    B. the more perishable his product
    C. the lower his degree of capacity utilization
    D. the lower his degree of labour mobility
    E. the lower the level of unemployment
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    (Original post by andrewlee89)
    Hi, a few questions here to which there is no answer. Care to help out?

    1. Diminishing returns arise because

    A. additional men can be employed only at higher wage costs
    B. factors of production are imperfect substitutes for each other
    C. additional output can be sold only at a lower price
    D. technical progress is seldom neutral in its effects on factor productivities
    E. additional units of a good imply lower utility per unit

    I say, it is E. What do u guys think?
    Same here, I think it's the correct answer :p:

    2. In deriving the short run supply schedule for a firm, which one of the following is taken as given?

    A. the state of technology
    B. the number of consumers
    C. the number of suppliers
    D. the price of the good
    E. the quantities of all factors

    A is my choice.
    Sure as the state of technology changes in the very long run


    3. 'If constant amounts of a variable factor are added to fixed quantities of other factors, the marginal returns to the variable factor will eventually diminish.'

    This is a statement to the law of

    A. decreasing returns to scale
    B. diminishing marginal substitution
    C. diminishing marginal utility
    D. increasing costs
    E. variable proportions

    Uhm, this is confusing, it could either be A,B or C for me. Can u guys plz help out?
    I myself think it's C as it's similar to Diminishing Marginal Returns, A means if you put for example you double units of labour and capital but you get in returns less than doubled output


    4. A manufacturer's ability to increase his output in the short run will be greater

    A. the higher his capital-output ratio
    B. the more perishable his product
    C. the lower his degree of capacity utilization
    D. the lower his degree of labour mobility
    E. the lower the level of unemployment
    I just don't get it :confused:
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    1. Diminishing returns arise because

    A. additional men can be employed only at higher wage costs
    B. factors of production are imperfect substitutes for each other
    C. additional output can be sold only at a lower price
    D. technical progress is seldom neutral in its effects on factor productivities
    E. additional units of a good imply lower utility per unit

    You're right.

    2. In deriving the short run supply schedule for a firm, which one of the following is taken as given?

    A. the state of technology
    B. the number of consumers
    C. the number of suppliers
    D. the price of the good
    E. the quantities of all factors

    Certainly A

    3. 'If constant amounts of a variable factor are added to fixed quantities of other factors, the marginal returns to the variable factor will eventually diminish.'

    This is a statement to the law of

    A. decreasing returns to scale
    B. diminishing marginal substitution
    C. diminishing marginal utility
    D. increasing costs
    E. variable proportions

    D and E obviously wrong. B and C are to do with consumers not firms.


    4. A manufacturer's ability to increase his output in the short run will be greater

    A. the higher his capital-output ratio
    B. the more perishable his product
    C. the lower his degree of capacity utilization
    D. the lower his degree of labour mobility
    E. the lower the level of unemployment

    He can't increase output if every machine is being used by some person. If there are spare machine not being used, then he needs only to hire more labour to run it (or just switch it on) in order to increase output.
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