In the Short Run, Why Does a Production Function Eventually

question 234

Multiple Choice

In the short run, why does a production function eventually display diminishing returns to labour?

• A)As the number of workers increases, it becomes difficult to monitor them.
• B)As a firm hires more workers, the skills and the work ethic of the additional workers will eventually decline.
• C)As the number of workers increases, eventually the gains from the division of labour and specialisation are used up.
• D)The opportunity cost of hiring additional workers must eventually rise.

Understand the concept of cost pools and how they are used in overhead allocation.

Understand the concept of faithful representation in accounting.

Recognize the difference between accounting rules for financial reporting and taxation in the United States.

Identify the bodies responsible for setting generally accepted accounting principles (GAAP) and their role.

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Definitions:

Techniques

Methods or strategies used to accomplish a task or solve a problem.

Layoff

The temporary or permanent termination of employees from their jobs by an employer, often due to economic downturns or restructuring.

Severance Pay

Financial compensation provided to employees upon termination of employment, often based on length of service and contract terms.

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