The Law of Diminishing Marginal Returns States That When the Marginal

question 80

True/False

The law of diminishing marginal returns states that when the marginal product is below the average product, average product must be decreasing.

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Definitions:

Operating Income

EBIT, or earnings before interest and taxes, denotes the income a business generates from its fundamental activities.

Margin Of Safety

The difference between actual sales and break-even sales, providing a cushion against which performance can decline before a business incurs a loss.

Contribution Margin

Contribution Margin is the amount by which sales revenue exceeds variable costs of production, indicating how much revenue contributes to fixed costs and profit.

Break-even Point

The level of sales at which total revenues equal total costs, resulting in no profit or loss.