To a Firm Facing Constant Input Prices, Increasing Marginal Returns

question 73

Multiple Choice

To a firm facing constant input prices, increasing marginal returns

• A)means that each additional unit of output costs more to produce than the previous unit
• B)means that the marginal product of the variable input decreases as more of the input is used
• C)can occur due to specialization and division of labor
• D)usually occur at very high rates of output
• E)can never occur

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Definitions:

Securities Trade

The buying and selling of financial instruments such as stocks, bonds, and mutual funds.

Fixed Cost

Costs that do not vary with the volume of output or sales, such as rent, salaries, and insurance premiums.

Target Cash Balance

The optimal amount of cash that a company aims to maintain to handle its operational and transactional needs.

Carrying Costs

The total expenses associated with holding or maintaining an asset over time, including storage, insurance, and taxes.