Question

1.

During periods of increasing marginal productivity:

Group of answer choices

Average product is decreasing.

Marginal product is decreasing.

Average product is constant, which leads to an increase in average product.

Average product is increasing.

2.

Economies of scale are associated with:

Group of answer choices

-Increasing per-unit costs.

-Declining per-unit costs.

-Increased monitoring costs.

-Increased levels of bureaucracy within a firm.

3.

When Wells Fargo transfers $2 million in central bank reserves to Bank of America. The Federal Reserve does the following:

Group of answer choices

-credits (decreases) Bank of America's account by $2 million and debits (increases) Wells Fargo's account by $2 million

-credits (increases) Bank of America's account by $2 million and debits (decreases) Wells Fargo's account by $2 million

-it buys bonds through open market operations

-provides a $2 million loan at the discount window

-it mandates that Wells Fargo $2 million in gold to facilitate the transaction

Answer 1

1) Marginal product is the additional product to the total product from the use an additional unit of input. Increasing marginal productivity or marginal product means the total product is increasing at an increasing rate.

Average product is the total product per input. When marginal product is increasing (total product increasing at an increasing rate), the average product will increaase with each additional unit of input is used.

This can be shown in the following graph

In the diagram, upto to the input units of 3, when mp(marginal product) increases, the average product also increases.

Therefore correct option is

Average product is increasing