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Because of diminishing returns, a factor of production in scarce supply has a: a. low marginal...

Question:

Because of diminishing returns, a factor of production in scarce supply has a:

a. low marginal product and a low rental price.

b. low marginal product and a high rental price.

c. high marginal product and a high rental price.

d. high marginal product and a low rental price.

Diminishing Returns:

The law of diminishing returns in economics, represents the idea of marginal product decreasing as supply increases. This means that there comes a point where profit is maximized and more supply would only cause you to lose money rather than gain money.

Answer and Explanation: 1

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Because of diminishing returns, a factor of production in scarce supply has a:

a. low marginal product and a low rental price.

b. low marginal...

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Law of Diminishing Returns: Definition & Examples

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Chapter 10 / Lesson 8
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Learn about the law of diminishing returns, or diminishing marginal returns. See the point of diminishing returns graphed and how to calculate it with examples.


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