Answer to Question #240938 in Economics for CCW

Question

Economics Chp. 4 Vocab:

make visual notes, acronyms, symbols to help remember definitions

18) law of diminishing returns -

19) fixed costs -

Answer 1

The law of diminishing returns (also: the law of diminishing returns) is one of the fundamental economic principles, which consists in the fact that in a commercial enterprise, the performance of which depends on several independent resources (for example, labor, financial, land, etc.), the cost of building up one of the resources with a fixed amount of the rest will, from a certain moment, bring less and less returns.

Fixed costs - eng. Fixed Costs arise in the course of doing business for almost any company. The term can also be referred to as "operating costs". Although recurring payments are usually characteristic of fixed costs, this does not mean that the amount will be fixed. For example, an insurance company decides to purchase its own office space by taking out a floating rate mortgage.