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:

Cash Dividends

Cash distributions to shareholders from a company's earnings.

Preferred Stock

A class of ownership in a corporation with a priority claim on assets and earnings before common stock; typically does not have voting rights but has a fixed dividend.

Capital Stock

The total amount of stock, both common and preferred, that a company is authorized to issue according to its corporate charter.

Privately Held Corporation

A corporation that has only a few stockholders and whose stock is not available for sale to the general public.