As Output Increases, Marginal Cost Will Eventually

question 40

Multiple Choice

As output increases, marginal cost will eventually

• A) decrease because of the law of diminishing returns.
• B) increase because of the law of increasing returns.
• C) increase because of the law of diminishing returns.
• D) decrease because of the law of increasing returns.

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Definitions:

Support Departments

Units within an organization that provide essential services or support to the core operational departments but do not directly contribute to revenue.

Projected Long-Run Needs

Anticipated requirements of a business over an extended period, which influence operational and strategic planning.

Capital Budget

A budget for major capital, or investment, expenditures that are used to acquire or upgrade physical assets such as property and equipment.

Dual Cost Allocation

A method in cost accounting that assigns costs to products or services based on both direct and indirect cost factors.