Explore BrainMass

Theory of diminishing returns

This content was STOLEN from BrainMass.com - View the original, and get the already-completed solution here!

Indicate whether each of the following statements is true or false and give the reason. (a) A firm should stop expanding output after reaching diminishing returns and (b) if large and small firms operate in the same industry, we must have constant returns to scale.

© BrainMass Inc. brainmass.com October 25, 2018, 3:27 am ad1c9bdddf

Solution Preview

a) False,

a firm should stop expanding output when marginal revenue = marginal cost.

b) Not always true.

Consider an economy of ...

Solution Summary

Theory of diminishing returns

See Also This Related BrainMass Solution

The law of diminishing returns and the business

How would you estimate additional dollar cost of adding sales people? How is the expected net revenue generated by adding an additional salesperson given a company's past sales experience? How would these cost and revenue estimates be used to determine whether a sales force increase is warranted? For example a company currently has 60 salespeople and wants to add another 5 to 10 more. Is there a specific equation?

View Full Posting Details