When a firm has diminishing marginal returns:
A) its output is falling.
B) marginal product is falling but is likely to be still positive.
C) total product falls because marginal product is falling and positive.
D) marginal product is always negative.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when adding an additional factor of production results in a smaller increase in output. This means the marginal product is falling but still positive, not negative.

When a Firm Has Diminishing Marginal Returns