In the short-run machinery is fixed also labor is variable

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Marginal Productivity & Price Elasticity

Marginal Productivity and Costs
In the short run, machinery is fixed and labor is variable for a business that uses only these two inputs. If, at the current level of output, marginal product of labor is declining
a. The marginal cost of producing output must be rising if output is increased.
b. average product of labor must also be rising.
c. average fixed cost must be greater than average variable cost.
d. None of the above.

Own Price Elasticity and Revenue
Millie produces and sells 300 jars of honey per day at a price of $8 per jar. In order to increase total revenues, she plans to increase prices from $8 per jar to $10 per jar. Mollie's strategy will work so long as:
a. The demand for honey is inelastic between $8 and $10.
b. The demand for honey is elastic between $8 and $10.
c. Honey is a normal good.
d. None of the above.

Own Price Elasticity of Water
Due to drought conditions, the local government wants to reduce the quantity demand of water by 10%. If it is estimated that the price elasticity of demand for water is -0.3, by how much (in percentage terms) must the price of water be increased to reach this goal?
a. 33.3%
b. 3.0 %
c. 0.3%
d. 0.003%

 

Reference no: EM1327331

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