{"id":56543,"date":"2024-04-16T00:46:29","date_gmt":"2024-04-16T00:46:29","guid":{"rendered":"https:\/\/exam.pscnotes.com\/mcq\/?p=56543"},"modified":"2024-04-16T00:46:29","modified_gmt":"2024-04-16T00:46:29","slug":"the-adding-up-theorem-under-constant-returns-to-scale-holds-when-the-factors-of-production-are-paid-according-to-their","status":"publish","type":"post","link":"https:\/\/exam.pscnotes.com\/mcq\/the-adding-up-theorem-under-constant-returns-to-scale-holds-when-the-factors-of-production-are-paid-according-to-their\/","title":{"rendered":"The Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their"},"content":{"rendered":"<p>[amp_mcq option1=&#8221;marginal productivities&#8221; option2=&#8221;average productivities&#8221; option3=&#8221;total productivities&#8221; option4=&#8221;ratio of marginal productivities to average productivities&#8221; correct=&#8221;option1&#8243;]<!--more--><\/p>\n<p>The correct answer is: A. marginal productivities.<\/p>\n<p>The Adding Up Theorem under constant returns to scale states that the total revenue of a firm will be equal to the sum of the payments made to the factors of production when the factors of production are paid according to their marginal productivities.<\/p>\n<p>Marginal productivity is the additional output that a firm can produce by using one more unit of a factor of production. For example, if a firm has one worker and produces 10 units of output, and then hires another worker and produces 15 units of output, the marginal productivity of the second worker is 5 units of output.<\/p>\n<p>If the factors of production are paid according to their marginal productivities, then the total revenue of the firm will be equal to the sum of the payments made to the factors of production. This is because the marginal productivity of a factor of production is the additional output that the firm can produce by using one more unit of that factor, and the total output of the firm is the sum of the outputs produced by each factor.<\/p>\n<p>The Adding Up Theorem under constant returns to scale is a useful tool for understanding the relationship between the factors of production and the output of a firm. It can be used to determine the optimal amount of each factor of production to use, and to calculate the total revenue of a firm.<\/p>\n<p>The other options are incorrect because they do not take into account the marginal productivity of the factors of production. Option B, average productivity, is the total output of a firm divided by the number of units of each factor of production. Option C, total productivity, is the total output of a firm. Option D, the ratio of marginal productivities to average productivities, is not a meaningful concept.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>[amp_mcq option1=&#8221;marginal productivities&#8221; option2=&#8221;average productivities&#8221; option3=&#8221;total productivities&#8221; option4=&#8221;ratio of marginal productivities to average productivities&#8221; correct=&#8221;option1&#8243;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[12],"tags":[],"class_list":["post-56543","post","type-post","status-publish","format-standard","hentry","category-economics","no-featured-image-padding"],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v22.2 (Yoast SEO v23.3) - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>The Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/exam.pscnotes.com\/mcq\/the-adding-up-theorem-under-constant-returns-to-scale-holds-when-the-factors-of-production-are-paid-according-to-their\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"The Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their\" \/>\n<meta property=\"og:description\" content=\"[amp_mcq option1=&#8221;marginal productivities&#8221; option2=&#8221;average productivities&#8221; option3=&#8221;total productivities&#8221; option4=&#8221;ratio of marginal productivities to average productivities&#8221; correct=&#8221;option1&#8243;]\" \/>\n<meta property=\"og:url\" content=\"https:\/\/exam.pscnotes.com\/mcq\/the-adding-up-theorem-under-constant-returns-to-scale-holds-when-the-factors-of-production-are-paid-according-to-their\/\" \/>\n<meta property=\"og:site_name\" content=\"MCQ and Quiz for Exams\" \/>\n<meta property=\"article:published_time\" content=\"2024-04-16T00:46:29+00:00\" \/>\n<meta name=\"author\" content=\"rawan239\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:label1\" content=\"Written by\" \/>\n\t<meta name=\"twitter:data1\" content=\"rawan239\" \/>\n\t<meta name=\"twitter:label2\" content=\"Est. reading time\" \/>\n\t<meta name=\"twitter:data2\" content=\"2 minutes\" \/>\n<!-- \/ Yoast SEO Premium plugin. -->","yoast_head_json":{"title":"The Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their","robots":{"index":"index","follow":"follow","max-snippet":"max-snippet:-1","max-image-preview":"max-image-preview:large","max-video-preview":"max-video-preview:-1"},"canonical":"https:\/\/exam.pscnotes.com\/mcq\/the-adding-up-theorem-under-constant-returns-to-scale-holds-when-the-factors-of-production-are-paid-according-to-their\/","og_locale":"en_US","og_type":"article","og_title":"The Adding Up Theorem under constant returns to scale holds when the factors of production are paid according to their","og_description":"[amp_mcq option1=&#8221;marginal productivities&#8221; 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