Diminishing Marginal Returns Occur When

question 99

Multiple Choice

Diminishing marginal returns occur when:

• A)each additional unit of a variable factor adds more to total output than the previous unit.
• B)an additional variable factor adds less to total output than the previous unit.
• C)the marginal product of a variable factor is increasing but at a decreasing rate.
• D)total product decreases.

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Definitions:

Natural Monopoly

A market condition where due to high infrastructure costs or significant barriers to entry, a single company can supply a product or service more efficiently than any potential competitor.

Economic Profit

The difference between total revenue and total costs, including both explicit and implicit costs, reflecting the true financial gain of a business.

Price Discrimination

A pricing strategy where a seller charges different prices for the same product or service to different customers, not based on differences in costs.

Marginal Cost

The additional expense incurred from producing another unit of a product.