Diminishing Return

How do fixed inputs influence production functions?

• Fixed inputs influence production functions by setting limits on output levels and leading to diminishing returns as more variable inputs are added.

• Fixed inputs can be easily substituted with variable inputs in production functions

• Fixed inputs always lead to increasing returns in production functions

• Fixed inputs have no impact on production functions

Which of the following describes an eventual decline in the productivity of factor inputs as additional units of variable factors are added to fixed resources?

• Law of diminishing marginal utility

• Law of diminishing marginal returns

• Laffer curve

• Law of diminishing total product

A level of production in which the marginal production decreases with new investment

• market supply schedule

• individual supply schedule

• marginal revenue

• diminishing marginal returns

• marginal product of labor

What is the principle of diminishing returns in economics?

• A) It states that adding more of one factor of production, while holding others constant, will eventually yield lower per-unit returns.

• B) It suggests that increasing all factors of production will always lead to higher returns.

• C) It implies that reducing production factors will increase overall productivity.

• D) It means that production factors have no impact on returns.

Which of the following best illustrates the concept of diminishing returns?

• A) A factory that doubles its workforce and sees output quadruple.

• B) A farm that adds more fertilizer but sees a smaller increase in crop yield.

• C) A company that reduces its workforce and sees an increase in productivity.

• D) A business that invests in new technology and sees a constant increase in output.

How does the law of diminishing returns affect agricultural production?

• A) It allows for unlimited growth in crop yields.

• B) It leads to a decrease in crop yields as more inputs are added beyond a certain point.

• C) It has no effect on agricultural production.

• D) It ensures that crop yields increase proportionally with inputs.

In the context of diminishing returns, what happens when more workers are added to a fixed amount of capital?

• A) Output per worker increases indefinitely.

• B) Output per worker decreases after a certain point.

• C) Total output decreases immediately.

• D) Total output remains constant.

What is a real-world example of diminishing returns in a business setting?

• A) Hiring more employees in a small office space leading to overcrowding and reduced productivity.

• B) Increasing advertising budget and seeing a proportional increase in sales.

• C) Reducing the number of machines in a factory and seeing increased output.

• D) Expanding a store's inventory and seeing a constant increase in sales.

Which economic theory is closely related to the concept of diminishing returns?

• A) Keynesian economics

• B) Classical economics

• C) Supply-side economics

• D) Marxist economics

How does diminishing returns relate to resource allocation in economics?

• A) It suggests that resources should be allocated equally across all sectors.

• B) It indicates that resources should be concentrated in one area for maximum efficiency.

• C) It implies that additional resources yield progressively smaller increases in output.

• D) It means that resource allocation has no impact on returns.