The Law of Diminishing Marginal Returns States

question 88

Multiple Choice

The law of diminishing marginal returns states:

• A)As the size of a plant increases,marginal product eventually decreases.
• B)As the size of a firm's plant increases,average cost eventually decreases.
• C)As a firm uses more of a variable factor of production,with a given quantity of the fixed factor of production,the marginal product of the variable factor eventually diminishes.
• D)As a firm uses more of a variable factor of production,its average cost eventually decreases.
• E)As a firm uses more of a variable factor or production,total product eventually decreases.

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Definitions:

Net Fixed Assets

The value of a company's property, plant, and equipment minus any accumulated depreciation, representing long-term investments in the business.

Sales

The exchange of goods or services for money; also refers to the function or department within a business that handles this activity.

Times Interest Earned Ratio

A financial metric that measures a company's ability to meet its debt obligations based on its current income.

Operating Income

The profit realized from a business's operations, after deducting operating expenses like wages and cost of goods sold, but before interest and taxes.