The Law of Decreasing Returns States That as a Firm

question 223

Multiple Choice

The law of decreasing returns states that as a firm uses more of a

• A) fixed input, with a given quantity of variable inputs, the marginal product of the fixed input eventually decreases.
• B) variable input, total output will increase indefinitely.
• C) variable input, with a given quantity of fixed inputs, the marginal product of the variable input eventually decreases.
• D) variable input, output will begin to fall immediately.
• E) fixed input and a variable input, the marginal product of the fixed input and the marginal product of the variable input both decrease.

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Definitions:

Income Statement

A financial document that reports a company's financial performance over a specific period, detailing revenues, expenses, and net income or loss.

Common Stock

Common stock represents units of ownership in a corporation, granting holders voting rights and a share in the company's profits, often through dividends.

Ending Balance

The amount in an account at the end of an accounting period after all debits and credits have been accounted for.

Asset (A)

Resources owned by a company that have economic value and can provide future benefits.