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The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:
- a)Total physical product begins to fall
- b)The marginal physical product rises
- c)The marginal physical product falls
- d)The average physical product falls
Correct answer is option 'C'. Can you explain this answer?
Verified Answer
The law of diminishing (marginal) returns states that as more of a var...
The law of diminishing marginal returns states that, at some point, adding an additional factor of production results in smaller increases in output. With other production factors constant, adding additional workers beyond this optimal level will result in less efficient operations.
So option C is correct.
This question is part of UPSC exam. View all Commerce courses
Most Upvoted Answer
The law of diminishing (marginal) returns states that as more of a var...
Key Differences between Macroeconomic Decision-Makers and Individual Microeconomic Agents:
Focus of Decision-Makers:
- Macroeconomic decision-makers focus on making decisions that affect the economy as a whole, such as setting interest rates or managing inflation.
- Individual microeconomic agents, on the other hand, focus on their own decisions within specific markets, such as pricing goods or services.
Objectives:
- Macroeconomic decision-makers often have broader objectives related to overall economic stability and growth, such as controlling unemployment rates or promoting sustainable economic development.
- Individual microeconomic agents typically aim to maximize their own profit or welfare within their specific market environment.
Scope of Influence:
- Macroeconomic policies are typically pursued by statutory bodies such as central banks or government agencies, which have the authority to implement policies that impact the entire economy.
- Individual microeconomic agents have a more limited scope of influence, primarily affecting their own business operations or market interactions.
Consideration of Aggregate Effects:
- Macroeconomic decision-makers consider the aggregate effects of their policies on the economy as a whole, taking into account factors such as GDP growth, inflation rates, and unemployment levels.
- Individual microeconomic agents focus on their own individual actions and decisions within specific markets, without necessarily considering the broader macroeconomic implications.
In summary, the key distinction between macroeconomic decision-makers and individual microeconomic agents lies in the focus, objectives, scope of influence, and consideration of aggregate effects in their decision-making processes.
Focus of Decision-Makers:
- Macroeconomic decision-makers focus on making decisions that affect the economy as a whole, such as setting interest rates or managing inflation.
- Individual microeconomic agents, on the other hand, focus on their own decisions within specific markets, such as pricing goods or services.
Objectives:
- Macroeconomic decision-makers often have broader objectives related to overall economic stability and growth, such as controlling unemployment rates or promoting sustainable economic development.
- Individual microeconomic agents typically aim to maximize their own profit or welfare within their specific market environment.
Scope of Influence:
- Macroeconomic policies are typically pursued by statutory bodies such as central banks or government agencies, which have the authority to implement policies that impact the entire economy.
- Individual microeconomic agents have a more limited scope of influence, primarily affecting their own business operations or market interactions.
Consideration of Aggregate Effects:
- Macroeconomic decision-makers consider the aggregate effects of their policies on the economy as a whole, taking into account factors such as GDP growth, inflation rates, and unemployment levels.
- Individual microeconomic agents focus on their own individual actions and decisions within specific markets, without necessarily considering the broader macroeconomic implications.
In summary, the key distinction between macroeconomic decision-makers and individual microeconomic agents lies in the focus, objectives, scope of influence, and consideration of aggregate effects in their decision-making processes.
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The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:a)Total physical product begins to fallb)The marginal physical product risesc)The marginal physical product fallsd)The average physical product fallsCorrect answer is option 'C'. Can you explain this answer?
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The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:a)Total physical product begins to fallb)The marginal physical product risesc)The marginal physical product fallsd)The average physical product fallsCorrect answer is option 'C'. Can you explain this answer? for Commerce 2024 is part of Commerce preparation. The Question and answers have been prepared according to the Commerce exam syllabus. Information about The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:a)Total physical product begins to fallb)The marginal physical product risesc)The marginal physical product fallsd)The average physical product fallsCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for Commerce 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for The law of diminishing (marginal) returns states that as more of a variable factor is added to a certain amount of a fixed factor, beyond some point:a)Total physical product begins to fallb)The marginal physical product risesc)The marginal physical product fallsd)The average physical product fallsCorrect answer is option 'C'. Can you explain this answer?.
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