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Law of Diminishing Return The principle that further inputs into a system produce ever lower increases in outputs. Any extra input will not produce an equal or worthwhile return. Fixed Costs Fixed costs are expenses whose total does not change in proportion to the activity of a business. Examples: Rent, Utilities, Machines Variable Costs Variable Costs change in relation to the activity of a business. Example: Materials need for production, Labor Gross Sales A measure of overall sale before cost are deducted Net Income A companies total income minus the cost of doing business. A compani