The Law of Variable Proportions states that increasing one resource while keeping others constant will lead to ___ in total output up to a certain point. |
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True or False: In the short run, the increase in the variable factor always leads to proportional increases in output. |
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False. Initially, increases in the variable factor lead to higher output, but eventually, diminishing returns set in. |
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The first stage of the Law of Variable Proportions is characterized by ___ and ___ of both total and marginal products. |
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In which stage of the Law of Variable Proportions does the marginal product become negative? |
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Fill in the blank: The Law of Variable Proportions assumes that technology remains ___ during the analysis. |
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What happens to marginal product when the number of laborers employed exceeds the optimal level? |
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Marginal product begins to decline and can become negative, indicating diminishing returns. |
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True or False: The average product is always greater than the marginal product in the first stage of the Law of Variable Proportions. |
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False. The average product can be less than the marginal product until they become equal at the maximum average product. |
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Fill in the blank: The Law of Variable Proportions is also known as the Law of ___. |
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Describe the relationship between total product, average product, and marginal product in the first stage of the Law of Variable Proportions. |
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In the first stage, total product increases rapidly, average product increases, and marginal product also increases until it reaches its peak. |
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What defines the transition from the first stage to the second stage in the context of the Law of Variable Proportions? |
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The transition occurs when the average product equals the marginal product, marking the peak of efficiency. |
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Fill in the blank: In the second stage of the Law of Variable Proportions, the total product continues to increase, but at a ___ rate. |
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Explain why a company would avoid production in the third stage of the Law of Variable Proportions. |
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In the third stage, additional inputs result in a negative marginal product, which would lead to losses for the company. |
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