The Law of Diminishing Marginal Returns

question 360

Multiple Choice

The law of diminishing marginal returns

• A) results in average variable cost (AVC), average total cost (ATC), and marginal cost (MC) curves eventually increasing at an increasing rate.
• B) results in MC but not ATC curves eventually increasing at an increasing rate.
• C) causes average fixed costs to decline continuously as output increases.
• D) causes the difference between average total cost and average variable cost to shrink as output increases.

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Definitions:

AASB 127

The Australian Accounting Standards Board guideline that outlines the accounting and disclosure requirements for investments in associates and joint ventures.

Consolidated Financial Statements

Financial statements that represent the consolidation of a corporation and all its subsidiaries, portraying the financial position and performance of the company as a single entity.

Reporting Entity

A reporting entity is an entity or economic unit for which financial statements are prepared and presented to users.

Parent Entity

A company that has control, directly or indirectly, over other companies or subsidiaries.