If Each Additional Worker Hired Contributes Less to Total Output

question 80

Multiple Choice

If each additional worker hired contributes less to total output, then:

• A) economies of scale are present.
• B) total output will fall if an extra worker is hired.
• C) diminishing returns are occurring.
• D) none of the above

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Definitions:

Financial Risk

The potential for monetary loss in investing or engaging in a business enterprise.

Capital Asset Pricing Model

A model that describes the relationship between systematic risk and expected return for assets, particularly stocks.

M&M Proposition I

Modigliani and Miller Proposition I states that in a world without taxes, bankruptcy costs, and asymmetric information, a firm's value is unaffected by how it is financed, whether by debt or equity.

Law Of One Price

An economic theory that states that in efficient markets, identical goods must have only one price.