The law of ________ explains why a marginal revenue product schedule eventually declines.
A) diminishing marginal opportunity costs
B) increasing marginal returns
C) increasing marginal opportunity costs
D) diminishing marginal returns

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns explains why a marginal revenue product schedule eventually declines. This economic principle states that as more units of a variable input (like labor) are added to a fixed input (like capital or land), the additional output produced by each new unit of the variable input will eventually decrease. This decrease in additional output leads to a decline in the marginal revenue product, which is the additional revenue generated by employing one more unit of input.

The Law of ________ Explains Why a Marginal Revenue Product