The principle of diminishing returns occurs
A) when there is only one input.
B) when there are two or more inputs and at least one input is held fixed.
C) when there are two or more inputs and all inputs are held fixed.
D) when there are two or more inputs and all inputs are allowed to vary.

Question

Quizplus · Accepted Answer

The principle of diminishing returns occurs when there are two or more inputs and at least one input is held fixed. This means that as the variable input (the one not held fixed) is increased, the additional output produced begins to decrease at a certain point, eventually leading to a point where additional input leads to no additional output. This is due to the fixed input becoming a limiting factor in the production process.

The Principle of Diminishing Returns Occurs