Author Question: When you have diminishing marginal returns to labor A) variable costs remain constant as more ... (Read 183 times)

jeatrice · **on:** Jul 1, 2018

When you have diminishing marginal returns to labor

A) variable costs remain constant as more output is produced.
B) variable costs fall as more output is produced.
C) variable costs rise as more output is produced.
D) fixed costs rise as more output is produced because you have to buy more equipment to compensate.

Question 2

What is cost-benefit analysis? Describe the process of cost-benefit analysis.

What will be an ideal response?

frejo · **Reply #1 on:** Jul 1, 2018

Answer to Question 1

C

Answer to Question 2

Cost-benefit analysis is an attempt to compare the costs and benefits of a program. Typically, this will be undertaken when a program is in the planning stages to see whether the program should go forward. The first step in cost benefit analysis is enumerating the options available. For some goals, only one option might be feasible but for others multiple options might be feasible, with one more cost-effective than the others. The second step is to enumerate the costs and benefits of each option. This involves enumerating all of the primary and significant secondary effects, making sure not to double count any costs or benefits. The third step is converting the costs and benefits to dollar terms. Finally, if benefits or costs occur in future periods, they need to be discounted to the current period.