The law of diminishing returns applies to:
A) the short run only.
B) the long run only.
C) both the short and the long run.
D) neither the short nor the long run.
E) all inputs, with no reference to the time period.

Question

Quizplus · Accepted Answer

The law of diminishing returns applies specifically to the short run because it describes a situation where, as additional units of a variable input (like labor) are added to a fixed input (like capital or land), the additional output produced from each new unit of input eventually decreases. This concept assumes at least one input is fixed, which is characteristic of the short-run period in economic analysis.

The Law of Diminishing Returns Applies To