The Principle of Diminishing Returns to Capital States That If

question 15

Multiple Choice

The principle of diminishing returns to capital states that if the amount of labor and other inputs employed is held constant, then the greater the amount of capital in use the:

• A)less is produced.
• B)less production is wasted.
• C)the more an additional unit of capital adds to production.
• D)the less an additional unit of capital adds to production.

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Definitions:

T-bonds

Treasury bonds, long-term government debt securities with maturity periods typically over 20 years, offering interest payments semiannually.

Corporate Bonds

Debt securities issued by corporations to finance their operations, expansions, or projects, which pay fixed or variable interest rates to investors.

Yield To Maturity

A measure of the annualized return anticipated on a bond if the bond is held until its maturity date, accounting for current market price, par value, coupon interest rate, and time to maturity.

Par Value

A nominal value assigned to a security or company stock, serving as the minimum price at which the security can initially be sold.