## Oliver 75 - 71st Question

jyotimayank
Expert
Posts: 507
Joined: Mon Mar 09, 2015 6:01 am

### Oliver 75 - 71st Question

71. A project sponsor requested earned value data on two concurrent projects from the project managers. Both projects are regarded as equally important and strategically beneficial and have been finished by over 80%. He received the following information:
Project A: PV: \$1,800,000 EV: \$2,300,000 AC: \$2,100,000
Project B: PV: \$2,000,000 EV: \$1,500,000 AC: \$1,600,000
The sponsor considers to shift some resources from project A to project B to speed up the second project which is currently behind schedule. What is the most likely outcome of such a measure?

A. Changing team assignments during late course of a project typically increases cost efficiency.
B. Changing team assignments during late course of a project typically increases time efficiency.
C. According to the law of diminishing returns, the consolidated cost variance of the two projects will decrease.
D. According to the law of diminishing returns, the consolidated cost variance of the two projects will increase.
Jyoti Gupta
PMP Mentor & Coach

iZenbridge Consultancy Pvt Ltd
Ananyapmp
Beginner
Posts: 45
Joined: Fri Apr 22, 2016 11:25 am

### Re: Oliver 75 - 71st Question

C
sarthy
Beginner
Posts: 25
Joined: Sun Feb 22, 2015 2:44 pm

### Re: Oliver 75 - 71st Question

C
jyotimayank
Expert
Posts: 507
Joined: Mon Mar 09, 2015 6:01 am

### Re: Oliver 75 - 71st Question

Yes Option C is the right answer.

A concept in economics that if one factor of production is increased while other factors are held constant, the output per unit of the variable factor will eventually diminish. Although the marginal productivity of the workforce decreases as output increases, diminishing returns do not mean negative returns until (in this example) the number of workers exceeds the available machines.

The law of diminishing returns is an economic principle stating that as investment in a particular area increases, the rate of profit from that investment, after a certain point, cannot continue to increase if other variables remain at a constant. As investment continues past that point, the return diminishes progressively.

For more insight of this topic refer to the following link

viewtopic.php?f=3&t=2662
Jyoti Gupta
PMP Mentor & Coach

iZenbridge Consultancy Pvt Ltd