If the Price of Labor Is Constant and a Firm

question 172

Multiple Choice

If the price of labor is constant and a firm experiences diminishing marginal product, then its

• A) marginal costs decrease.
• B) fixed costs increase.
• C) average variable cost increases.
• D) total costs decrease.

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Definitions:

Cash Dividends

Payments made by a corporation to its shareholders from the company's profits.

Equity Method

An accounting technique used to record investments in which the investor has significant influence over the investee but does not control it.

Statement of Cash Flows

A financial report summarizing the amount of cash and cash equivalents entering and leaving a company.

Investing Activities

Financial actions related to the purchase and sale of long-term assets and investments, which are reflected on the cash flow statement.