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:

Tax Savings

Reduction in tax payments achieved through allowable deductions, credits, or adjustments.

Capital Budgeting

The method of assessing and choosing long-term investment opportunities that align with the company's objective of maximizing wealth.

Inventory

A company's merchandise, raw materials, and finished and unfinished products which have not yet been sold.

Analytical Techniques

A broad range of methods and tools used to evaluate and interpret data for decision-making and problem-solving purposes.