The Principle of Diminishing Returns Occurs

question 50

Multiple Choice

The principle of diminishing returns occurs

• A) when there is only one input.
• B) when there are two or more inputs and at least one input is held fixed.
• C) when there are two or more inputs and all inputs are held fixed.
• D) when there are two or more inputs and all inputs are allowed to vary.

---

Definitions:

Consumer Surplus

The variance between the amount consumers are ready to spend on a good or service and the actual amount they pay.

Efficiency

The degree to which resources are used effectively and waste is minimized, often aiming at maximizing output from given inputs.

Highest-value Bidder

The participant in an auction willing to pay the most for the item up for bid.

English Auction

A public sale method where bids are openly made and raised until no higher bid is offered, with the highest bidder purchasing the item.