If You Add Too Many Inputs,your Business May Experience

question 52

Multiple Choice

If you add too many inputs,your business may experience

• A) increasing marginal revenue.
• B) diminishing marginal product.
• C) diminishing cost input.
• D) accelerated product function.

---

Definitions:

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit. This figure shows how much each unit contributes to covering fixed costs and generating profit.

Fixed Costs

Expenses that do not change in total as production volume increases or decreases, such as rent and salaries.

Safety Margin

The difference between the actual level of sales or production and the break-even point, measuring the cushion a company has before it incurs losses.

Break Even Point

The financial analysis term where total revenues equal total expenses, and there is no profit or loss.