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A Firm Produces Its Product Using Both Capital and Labor

Question 76

Multiple Choice

A firm produces its product using both capital and labor.When it does not change its capital usage,but doubles its labor input,its output increases by less than 50%.Which of the following is the most likely explanation of this finding?


A) the principle of opportunity cost
B) the principle of diminishing returns
C) the marginal principle
D) the spillover principle

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