Assume JustDoIt Co

question 55

Multiple Choice

Assume JustDoIt Co.increases its operating efficiency such that costs decrease while sales remain constant.As a result,given all else constant,the:

• A)equity multiplier will decrease
• B)return on assets will decrease.
• C)profit margin will decline.
• D)return on equity will increase.
• E)total asset turnover will increase.

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Definitions:

Diminishing Marginal Product

The principle that as more of a variable input is added to a fixed input, the additional output gained from each new unit of input will eventually decrease.

Marginal Costs

The extra expense associated with manufacturing an additional unit of a product or service.

Marginal Returns

Marginal Returns refer to the additional output or benefit received from increasing one unit of a particular input while keeping other inputs constant.

Marginal Cost

The incremental cost associated with the production of an extra unit of a product or service.