Practice Questions
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In the context of labor supply, what does the concept of marginal returns refer to?
Marginal returns mean the extra output you get when you add one more worker. Other options are incorrect because This option talks about total output,...
How does an increase in productivity affect the labor force participation rate, assuming all other factors remain constant?
When productivity goes up, fewer workers are needed to produce the same amount of goods. Other options are incorrect because This answer suggests that...
How does the concept of marginal returns influence the labor supply when considering the income effect?
When wages go up, workers feel richer. Other options are incorrect because This answer suggests that lower returns mean more work; This option says th...
How does an increase in the labor force participation rate affect the marginal returns of labor in an economy operating at labor market equilibrium?
When more people join the workforce, there are more workers competing for the same jobs. Other options are incorrect because Some might think that mor...
How does an increase in the labor supply, influenced by the substitution effect, impact the marginal returns to labor in an economy striving for economic efficiency?
When more workers join, each additional worker helps less than the one before. Other options are incorrect because Some might think more workers alway...
What happens to the marginal returns when additional units of labor are added to a fixed amount of capital?
When you add more workers to the same tools and machines, each new worker helps less than the one before. Other options are incorrect because Some mig...
What happens to marginal returns when additional units of labor are employed while keeping capital constant?
When you add more workers but keep machines the same, each worker has less to work with. Other options are incorrect because Some might think that mor...
In the context of labor supply, what does the principle of diminishing returns suggest about hiring additional workers when other factors remain constant?
When you hire more workers, each one adds less extra output than the one before. Other options are incorrect because Some might think that hiring more...
How does the concept of diminishing marginal returns affect labor supply decisions in a business?
When a business hires more workers, the first few usually help a lot. Other options are incorrect because Some people think that more workers always m...
If a company continues to hire more workers but notices that the additional output produced by each new worker is decreasing, what is the most likely underlying cause of this phenomenon?
When a company hires more workers, but has the same amount of equipment or space, each worker has less to work with. Other options are incorrect becau...
As more workers are hired, the increase in output begins to decline due to the principle of __________, where additional labor results in progressively smaller increases in productivity while other inputs remain constant.
This principle explains that adding more workers can lead to less and less extra output. Other options are incorrect because This idea suggests that a...
If hiring one worker increases output significantly, and hiring a second worker still increases output but less than the first, then hiring a third worker will likely lead to output increases that are: A:B :: D:?
When you add more workers, each one helps less than the last. Other options are incorrect because Some might think each worker adds more output than t...
A factory initially hires one worker, leading to a significant increase in output. As the factory hires additional workers, it notices that the output gain from each subsequent worker is reduced. Which category best describes this phenomenon?
This means that adding more workers gives less extra output each time. Other options are incorrect because This idea suggests that adding more workers...
Which of the following statements accurately describe the concept of diminishing marginal returns in the context of labor supply? Select all that apply.
Other options are incorrect because Many people think that more workers always mean more output; Some might believe that adding workers will always he...
A factory notices that hiring a fourth worker leads to only a slight increase in total output. What principle explains this phenomenon?
Diminishing marginal returns means that adding more workers gives smaller increases in output. Other options are incorrect because This idea suggests ...
A bakery currently employs three bakers and produces 120 loaves of bread per day. When they hire a fourth baker, they notice production increases to 140 loaves. However, when they hire a fifth baker, production only increases to 150 loaves. What principle best explains this situation, and how should the bakery adjust their hiring practices based on this observation?
The bakery should check if other things are slowing down production. Other options are incorrect because This suggests that every new baker always hel...
Arrange the following steps demonstrating the concept of diminishing marginal returns in labor supply from first to last: A) Hiring a fourth worker leads to a smaller increase in output compared to the third worker, B) The first worker significantly increases production, C) The second and third workers continue to add output at a decreasing rate, D) The production process experiences limited resources that become constrained.
The correct order shows how adding workers affects output. Other options are incorrect because This order suggests that adding workers always increase...
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