Question

Because of diminishing marginal product, a factor in abundant supply has a low marginal product and thus a ____ price, and a factor in scarce supply has a high marginal product and a ____ price.

1. Low price, high price
2. Inexpensive price, costly price
3. Affordable price, expensive price
4. Cheap price, expensive price

Answer 1

In economics, factors in abundant supply have low marginal product and low prices, while factors in scarce supply have high marginal product and high prices.

Step-by-step explanation:

In economics, because of diminishing marginal product, a factor in abundant supply has a low marginal product and thus a low price, while a factor in scarce supply has a high marginal product and a high price.