According to Diminishing Marginal Product, If All the Inputs to a Firm

question 89

Multiple Choice

According to diminishing marginal product, if all the inputs to a firm are increased in equal proportions,

• A)output will increase more than in proportion to the increase in the inputs.
• B)output will increase less than in proportion to the increase in the inputs.
• C)output will increase exactly in proportion to the increase in the inputs.
• D)output will increase more than in proportion to the increase in the inputs at first, but it will eventually increase less than in proportion to the increase in the inputs.
• E)The law of diminishing returns says nothing about what will happen to output when all inputs are increased in equal proportions.

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Definitions:

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The rate of return that a company must generate on equity-financed projects to retain its market value, reflecting the compensation investors expect for their risk.

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Static Model

A fixed scenario analysis tool that assumes no change in variables over time when evaluating economic conditions or investment outcomes.

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The accounting process of allocating the cost of tangible assets over their useful lives to account for declines in value.