When an Additional Unit of a Variable Input Adds Less

question 80

Multiple Choice

When an additional unit of a variable input adds less to total product than the previous unit, the firm must be experiencing:

• A)increasing returns.
• B)diminishing marginal returns.
• C)diminishing total returns.
• D)diminishing marginal returns and diminishing total returns.

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Definitions:

Accounts Payable

Accounts payable are liabilities of a business that represent its obligations to pay off a short-term debt to its creditors or suppliers.

Service Revenue

The income earned by a company for the services it has provided to its customers.

Normal Starting Balance

Normal Starting Balance refers to the initial amount of money in an account at the beginning of a financial period.

Debit Postings

Entries made on the left side of an account, increasing the balance of assets and expenses or decreasing liabilities and equity.