The Law of Diminishing Marginal Productivity Does Not Apply in the Long

question 18

Multiple Choice

The law of diminishing marginal productivity does not apply in the long run because:

• A) some inputs are fixed in the long run.
• B) some inputs are variable in the long run.
• C) no inputs are fixed in the long run.
• D) all inputs are fixed in the long run.

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Definitions:

Optimal R&D

Refers to the most efficient level of spending on research and development activities, where the marginal benefit of R&D equals its marginal cost.

Interest-Rate Cost of Borrowing

The expense incurred by an individual or entity when borrowing money, calculated as a percentage of the total amount loaned.

R&D Expenditure

Financial investments made towards research and development activities aimed at innovation, improving products, and discovering new knowledge.

One-Time Added Profit

Profit earned from a unique, non-recurring transaction or event.