The Law of Diminishing Returns Only Applies in Cases Where

question 371

Multiple Choice

The law of diminishing returns only applies in cases where

• A)there is increasing scarcity of factors of production.
• B)the price of extra units of a factor is increasing.
• C)there is at least one fixed factor of production.
• D)capital is a variable input.

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Definitions:

Direct Materials Quantity Variance

A financial measure that shows the difference between the actual quantity of materials used and the standard quantity expected for production.

Standard Price

The predetermined cost that a company expects to pay for inventory or inputs, used for budgeting and variance analysis.

Variable Factory Overhead

Costs that fluctuate with production volume, such as utilities and materials used in the manufacturing process.

Controllable Variance

The difference between actual expenses and budgeted expenses that management has the power to influence or control.