The Law of Diminishing Returns to a Variable Input

question 55

Multiple Choice

The law of diminishing returns to a variable input:

• A)implies that total output must eventually decline.
• B)implies that the MP of an input must rise initially.
• C)implies that the MP of an input declines.
• D)assumes that there are just two inputs.

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Definitions:

Automotive Engines

The specific units within vehicles that convert fuel into mechanical power, allowing the vehicle to move.

Materials Quantity Variance

The discrepancy between what was actually used in terms of material for production and what was anticipated, times the standard cost for each unit.

Direct Material

Primary materials used in the making of a product that can be directly traced to the finished good.

Materials Price Variance

The difference between the actual cost of materials purchased and the expected (standard) cost, multiplied by the quantity of materials.