Figure 7-1
-The "law" of diminishing returns is also referred to as
A)the "law" of diminishing returns to scale.
B)the "law" of variable input proportions.
C)diminishing average physical product.
D)the "law" of decreasing cost.

Question

Figure 7-1 
-The "law" of diminishing returns is also referred to as
A)the "law" of diminishing returns to scale. 
B)the "law" of variable input proportions. 
C)diminishing average physical product. 
D)the "law" of decreasing cost.

Quizplus · Accepted Answer

The "law" of diminishing returns refers to the relationship between inputs and outputs in the short run, where adding more input will result in smaller and smaller increases in output. It is also known as the "law" of variable input proportions because it states that as one input (such as labor) is increased while others (such as capital or land) are held constant, the marginal product of the variable input will eventually decline, leading to diminishing returns. The other options are not correct descriptions of this concept.

Figure 7-1 -The "Law" of Diminishing Returns Is Also Referred to as Referred