Marginal returns and decreasing marginal returns

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Imagine that you have invested $1 million in a McDonald’s franchise restaurant. The investment includes expenses for land, buildings, and franchise fees.

What are some of the explicit costs and implicit costs of this franchise operation?

How do you expect the output of your franchise to change as you hire more labor? Do you expect to see increasing marginal returns, decreasing marginal returns, or constant returns to labor? Explain.

Reference no: EM131002436

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