Diminishing Returns Means That

question 19

Multiple Choice

Diminishing returns means that

• A)each additional unit of labor produces successively less real GDP.
• B)hiring more labor results in less real GDP.
• C)each extra unit of real GDP produced requires less labor.
• D)each additional unit of labor produces successively more real GDP.
• E)hiring more labor must lower the real wage rate.

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Definitions:

Prepaid Rent

Prepaid Rent represents payments made in advance for rent, which is recorded as an asset on the balance sheet and expensed over time as it is used.

Utilities Expense

Costs incurred by a business for basic services such as electricity, gas, water, and sewerage, recognized in the accounting period in which they are incurred.

Sales Revenue

The total amount of money generated from selling goods or services before any costs or expenses are deducted.

Calendar-Year

A one-year period that begins on January 1 and ends on December 31, used for financial and tax reporting purposes.