Answer to Question #181910 in Microeconomics for James Achilefu

Question

QUESTION 5

When economists use the term capital, they:

1. Are referring only to financial capital.
2. Are referring to financial capital and opportunity cost.
3. Do not mean financial capital.
4. Both answers A and B above.
5. Both answers A and C above. 

QUESTION 6

Different products:

1. Cannot exist.
2. Have different production functions.
3. Have identical production functions.
4. All of the above.
5. None of the above.

QUESTION 7

Eventually, additional workers:

1. Will have decreasing marginal product.
2. Will have increasing marginal product.
3. Will not have a marginal product.
4. Will forget their marginal product.
5. All of the above.

QUESTION 8

Profit is:

1. Always positive.
2. What’s left over from revenues after the firm pays all other costs.
3. The residual.
4. Both answers A and B above.
5. Both answers B and C above.

Answer 1

5

C. Do not mean financial capital.

Explanation.

The assets–physical resources, plants, and equipment–that allow for improved job efficiency are referred to as capital by economists. Financial capital, which comprises debt and equity acquired by companies to function and grow, is distinct from economic capital.

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B. Have different product functions.

Explanation.

Each commodity has its own set and production functions. Since each company produces differently, firms of the same field can have slightly different production functions. One pizza shop may make its own dough and sauce, whilst another may purchase them already prepared.

7

A. Will have decreasing marginal product.

Explanation.

The rule of diminishing marginal returns implies that the marginal product of labor (MPL) will inevitably decrease in most industries. As units of one input are added (while all other inputs remain constant), a point will be reached where the subsequent contributions to output will begin to decline; that is, the marginal product will decline. According to the rule.

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B. What’s left over from revenues after the firm pays all other costs.

Explanation.

After a firm has paid for its expenses, profit is the remaining revenue, also known as income.

Profit is normally found in an income statement and can either be positive, negative, or zero.