When the Law of Diminishing Returns Takes Effect

question 36

Multiple Choice

When the law of diminishing returns takes effect

• A)firms must add increasingly more input if they are to maintain the same extra amount of output.
• B)firms must add decreasingly more input if they are to maintain the same extra amount of output.
• C)more input must be added in order to increase its output.
• D)a firm must always try to add the same amount of input to the production process.

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Definitions:

Information Technology

The employment of computers, storage systems, networks, and various physical assets, infrastructure, and procedures to generate, process, safeguard, store, and share every type of electronic information.

Step-down Method

An allocation method used in cost accounting to assign overhead costs to different departments based on a hierarchical order.

Labor Hours

The total number of hours worked by employees for which they are compensated, often used as a basis for allocating overhead in cost accounting.

Space Occupied

The amount of physical area taken up by an entity, such as inventory in a warehouse or machinery in a factory.