Which of the Following Statements Best Summarizes the Law of Diminishing

question 92

Multiple Choice

Which of the following statements best summarizes the law of diminishing marginal returns?

• A) In the short run, as more labor is hired, output diminishes.
• B) In the short run, as more labor is hired, output increases at a diminishing rate.
• C) In the short run, the amount of labor a firm will hire diminishes as output increases.
• D) As more labor is hired, the length of time that defines the short run diminishes.

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Definitions:

Total Revenues

The sum of money received from selling goods or services which are the main activities of a business.

Cost Method

An accounting method used to value investments, where the investment is recorded at cost and adjusted only for impairments.

Equity Method

An accounting technique used by a company to record its investment in another company when it has significant influence but does not have full control or majority ownership.

Income Tax Allocation

Refers to the process of assigning income tax expense or benefit to various components of an organization's financial statements.