Figure 25-1 -Refer to Figure 25-1. the Curve Becomes Flatter as the Flatter

question 161

Multiple Choice

Figure 25-1
-Refer to Figure 25-1. The curve becomes flatter as the amount of capital per worker increases because of

• A)increasing returns to capital.
• B)increasing returns to labor.
• C)diminishing returns to capital.
• D)diminishing returns to labor.

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Definitions:

Return on Equity

A measure of financial performance calculated by dividing net income by shareholder's equity, indicating how effectively management is using a company’s assets to create profits.

Gross Margin

The difference between sales revenue and the cost of goods sold, representing the profit made before accounting for operating expenses.

Net Operating Income

The total profit of a business after operating expenses are subtracted from gross profit but before incomes and taxes are deducted.

Return on Total Assets

A financial ratio that measures the profitability of a company in relation to its total assets.