Which of the Following Best Explains the Decline in Marginal

question 154

Multiple Choice

Which of the following best explains the decline in marginal revenue product (MRP) ?

• A) As more and more of a variable factor (ex: Labor) is added to a fixed factor (ex: capital), total product become smaller and smaller.
• B) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal product become smaller and smaller as defined by the law of diminishing returns.
• C) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal utility becomes smaller and smaller.
• D) As more and more of a variable factor (ex: labor) is added to a fixed factor (ex: capital), marginal revenue product (MRP) become larger and larger.

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Definitions:

B Credit Rating

A rating denoting a relatively high risk level for investors or lenders, indicating that the entity has significant credit risk but is not in default.

Treasury Yield Curve

A graphical representation showing the yields on U.S. Treasury securities at fixed maturities, indicating the relationship between interest rates and the length of time to maturity.

Short-term Yields

Interest rates or returns on investments or securities that mature in a short period, typically less than one year.

A Credit Rating

A measure used by creditors to determine the ability of a borrower to pay back debt.