The law of diminishing returns states that,ceteris paribus,the

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as additional units of a variable input (such as labor) are added to a fixed input (such as capital), the increase in output will eventually become smaller until it reaches a point where additional units of the variable input actually decrease output. This point is known as the point of diminishing returns, and it occurs because the fixed input is not sufficient to support an unlimited increase in the variable input. Thus, choice D is the correct answer as it states that the MPP of labor (or the amount of additional output produced by each unit of additional labor) declines as more of it is employed with a given quantity of other (fixed) inputs.

The Law of Diminishing Returns States That,ceteris Paribus,the