At what point does spending more on speakers begin to give you diminishing returns on sound quality?
Microeconomics is a branch of economics. It studies the behavior of the economy's individuals and organizations. It shows the relationship of various factors like prices, utility, productivity, and other elements of economics. It also studies the behavior of the interaction of individuals and firms.
Answer and Explanation:
Diminishing returns is simply the decrease in marginal output in an economy. In simple words, when keeping all other factors constant, if the increase of inputs, results in less and less output, it is called diminishing returns. When a person is spending on speakers, the marginal utility of that person will increase until the sound quality of the speaker is rising. The speakers will tear off with time, and it will eventually start giving diminishing sound quality which will not be further improved by spending more money. At this point, spending more will start giving diminishing returns.
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from Introduction to Macroeconomics: Help and ReviewChapter 10 / Lesson 8