NDSU ECON 201 EXAM 2
law of diminishing returns - Answer-as we add more and more of a variable resource to a fixed set of
inputs with a fixed technology, the resulting output will increase over the relevant range, but at a
decreasing rate
total physical product of labor - Answer-the total amount of a product produced during a given time
period by labor
marginal physical product of labor - Answer-the extra physical product resulting from the addition of
one more unit of labor
increasing returns to scale - Answer-is when the firm doubles inputs the resulting output more than
doubles
constant return to scale - Answer-is doubling of inputs would result in a doubling of the outputs
decreasing returns to scale - Answer-is when the firm doubles inputs, the resulting output would be less
than double
economies of scale - Answer-the lowering of average cost/unit by increasing the volume
natural market adjustment process - Answer-happens of naturally
law of diminishing returns - Answer-as we add more and more of a variable resource to a fixed set of
inputs with a fixed technology, the resulting output will increase over the relevant range, but at a
decreasing rate
total physical product of labor - Answer-the total amount of a product produced during a given time
period by labor
marginal physical product of labor - Answer-the extra physical product resulting from the addition of
one more unit of labor
increasing returns to scale - Answer-is when the firm doubles inputs the resulting output more than
doubles
constant return to scale - Answer-is doubling of inputs would result in a doubling of the outputs
decreasing returns to scale - Answer-is when the firm doubles inputs, the resulting output would be less
than double
economies of scale - Answer-the lowering of average cost/unit by increasing the volume
natural market adjustment process - Answer-happens of naturally
