What Is the Law of Diminishing Returns

question 108

Multiple Choice

What is the law of diminishing returns?

• A)As more of a fixed input is added to a variable input in the production process the resulting increase in output will,at some point,accelerate.
• B)As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,accelerate.
• C)As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,diminish.
• D)As more of a variable input is added to a fixed input in the production process the resulting increase in output will,at some point,become negative.

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Definitions:

DuPont Cellophane Case

The antitrust case brought against DuPont in which the U.S. Supreme Court ruled (in 1956) that while DuPont had a monopoly in the narrowly defined market for cellophane, it did not monopolize the more broadly defined market for flexible packaging materials. It was thus not guilty of violating the Sherman Act.

Microsoft Case

A 2002 antitrust case in which Microsoft was found guilty of violating the Sherman Act by engaging in a series of unlawful activities designed to maintain its monopoly in operating systems for personal computers; as a remedy the company was prohibited from engaging in a set of specific anticompetitive business practices.

DuPont Cellophane Case

A landmark antitrust case in which DuPont was accused of monopolistic practices in the cellophane market, highlighting issues of market dominance and competition.

Relevant Market

A market segment within which a particular product is sold, characterized by its competitiveness and substitutability.