-The firm depicted in Table 2.3 is facing diminishing returns because:
A) the number of workers can only be increased to 5.
B) capital is fixed.
C) capital and labor are both variable.
D) capital and labor are both fixed.

Question

-The firm depicted in Table 2.3 is facing diminishing returns because:
A) the number of workers can only be increased to 5. 
B) capital is fixed. 
C) capital and labor are both variable. 
D) capital and labor are both fixed.

Quizplus · Accepted Answer

Diminishing returns occur when one factor of production, such as capital, is fixed, and increasing the variable factor, like labor, leads to a smaller increase in output.

-The Firm Depicted in Table 2