Diminishing Marginal Returns Occur When

question 7

Multiple Choice

Diminishing marginal returns occur when

• A) one input is increasing and the others are held constant
• B) all inputs increase
• C) one input is decreasing while the other increases
• D) output is decreasing

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Definitions:

Current Ratio

A financial metric assessing a firm's capability to cover its short-term debts using its short-term assets, determined by dividing current assets by current liabilities.

Working Capital

The difference between a company's current assets and current liabilities, indicating short-term financial health.

Acid-test Ratio

A financial metric that measures a company's ability to cover its short-term liabilities with its most liquid assets.

Debt-to-equity Ratio

This proportion demonstrates the relative use of debt and shareholders' equity in the capital funding of a company's assets.