The Law of Diminishing Returns Shows That, in the Short

question 49

Multiple Choice

The law of diminishing returns shows that, in the short run, _____.

• A) productivity and costs change at the same rate
• B) productivity changes in proportion to changes in fixed costs
• C) as the marginal product of labour falls, variable costs rise
• D) changes in productivity do not affect changes in costs

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Definitions:

Capital Structure

The composition of a firm's financing through a combination of debt and equity.

Funds

Financial resources that are set aside for a specific purpose or investment, including both publicly traded funds and private investments.

Corporate Tax Liability

Corporate tax liability is the total amount of tax that a corporation is legally obligated to pay to the government based on its taxable income.