When Additions of Input to a Fixed Quantity of Another

question 46

Multiple Choice

When additions of input to a fixed quantity of another input lead to progressively smaller increases in output,we say we are facing

• A)diminishing returns.
• B)negative returns.
• C)accelerating returns.
• D)decreasing production.

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Definitions:

Equity Method

An accounting technique used to record investments in other companies, where the investment is reported as an asset and the investor's share of the investee's income is reported in the income statement.

Gross Profit

The financial metric resulting from subtracting the cost of goods sold from sales revenue, measuring the efficiency of production.

Accumulated Depreciation

The cumulative depreciation of an asset up to a single point in its life, reflecting the decrease in value due to wear, tear, or obsolescence.

Equity Method

An accounting technique used by firms to assess the profits earned by their investments in other companies, where the investment is accounted for initially at cost and adjusted thereafter for the post-acquisition change in the investor's share of the investee's net assets.