When a Firm's Marginal Productivity of an Input Eventually Declines

question 19

Multiple Choice

When a firm's marginal productivity of an input eventually declines as the quantity of input increases,then the production is experiencing

• A)Diminishing returns to scale
• B)Diminishing marginal product
• C)Increasing returns to scale
• D)Increasing marginal product

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Definitions:

Market Rate

The prevailing interest rate available in the overall financial market for securities or loans of a similar risk and maturity profile.

Annual Interest

The total amount of interest payable on a loan, bond, or other financial instrument over the course of a year.

Market Rate

The current interest rate offered in the market for instruments with similar risk and maturity levels.

Present Value Factor

A financial calculation used to determine the present value of a sum of money to be received in the future by accounting for time value of money.