Diminishing Returns to Physical Capital Implies That, When the Human

question 143

Multiple Choice

Diminishing returns to physical capital implies that, when the human capital per worker and the state of technology remain fixed, each successive increase in physical capital leads to _____ productivity.

• A) a smaller increase in
• B) a larger increase in
• C) a decrease in
• D) negative

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Definitions:

Cost-volume-profit Analysis

An accounting method used to determine how changes in costs and volume affect a company's operating income and net income.

Sales Mix

The proportion of different products or services that a business sells, significant because it can affect the company's overall profitability depending on the contribution margin of each item.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit. This metric indicates how much each unit sold contributes to fixed costs and profit.

Cost-Volume-Profit Analysis

A management accounting method used to understand the relationship between costs, sales volume, and profit at various levels of production.