Under Diminishing Marginal Returns,as the Amount of a Variable Input

question 45

Multiple Choice

Under diminishing marginal returns,as the amount of a variable input is reduced,the marginal product of a dollar's worth of the input will

• A) exceed total product.
• B) exceed average cost.
• C) rise.
• D) fall.
• E) remain the same, but total input cost will rise.

---

Definitions:

Fixed Overhead

Fixed Overhead refers to the consistent, non-variable expenses incurred by a business, regardless of its level of production or sales activities.

Operating Leverage

A measure of how revenue growth translates into growth in operating income, indicating the proportional relationship between fixed and variable costs.

Contribution Margin

The difference between the sales revenue of a product and its variable costs, used to cover fixed costs and profit.

Pretax Net Income

The amount of income earned by a business before taxes have been deducted.