If equal increments of one variable input are added while keeping the amounts of all other inputs fixed, and decreasing additions to total product begin, then:
A) diminishing marginal returns have begun.
B) marginal product has reached its maximum.
C) total product is rising.
D) average product is rising.
E) all of the above

Question

Quizplus · Accepted Answer

When equal increments of one variable input are added while keeping other inputs fixed and decreasing additions to total product begin, it indicates diminishing marginal returns (A), which occurs when the marginal product (additional output from the additional input) starts to decrease, meaning the marginal product has reached its maximum (B). Despite diminishing marginal returns, the total product continues to rise (C), albeit at a decreasing rate. Initially, the average product (total product divided by the quantity of the variable input) may continue to rise as well (D), until it reaches its peak and starts to decline. Therefore, all of the statements (A, B, C, D) correctly describe the scenario, making E the correct choice.

If Equal Increments of One Variable Input Are Added While