Which of the Following Is an Example of Diminishing Marginal

question 93

Multiple Choice

Which of the following is an example of diminishing marginal returns?

• A) The revenue of a cell phone manufacturer decreasing when it increases its product price
• B) The additional output produced by a firm decreasing as more workers are hired
• C) The profits of an entrepreneur increasing substantially after she fires a few of her employees
• D) The total output of a firm decreasing as more workers are hired

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Definitions:

Earnings Growth Rate

The annual rate of growth of a company's earnings per share, indicating the company's profitability trend over time.

Required Return

The minimum return an investor expects to achieve on an investment to compensate for its risk.

Dividend Growth Rate

The rate at which a company's dividend payments increase over time, often expressed as a percentage.

Dividends

Are the distribution of a portion of a company's earnings, decided by the board of directors, to a class of its shareholders.