The "Law of Diminishing Returns" states that
A)additional inputs will reduce output.
B)additional inputs will decrease average productivity.
C)the supply of inputs is becoming scarce.
D)additional inputs will lead to less additional output.

Question

Quizplus · Accepted Answer

The "Law of Diminishing Returns" states that as additional units of inputs are added to a production process, there will come a point where the resulting output will increase at a decreasing rate, meaning that each additional input will lead to less additional output. Therefore, D is the best choice. A is incorrect because additional inputs may still lead to an increase in output, just at a decreasing rate. B is incorrect as it is a result of the law, not the underlying principle. C is also incorrect as scarcity of inputs is not a necessary condition for the law to hold.

The "Law of Diminishing Returns" States That