Exhibit 21-3

-Refer to Exhibit 21-3. Diminishing marginal returns set in with the addition of the __________ unit of the variable input.

Question

Exhibit 21-3
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-Refer to Exhibit 21-3. Diminishing marginal returns set in with the addition of the __________ unit of the variable input.

Quizplus · Accepted Answer

Diminishing marginal returns occur when adding an additional factor of production results in a lower marginal per unit output. Without the specific details from Exhibit 21-3, the general principle is that diminishing marginal returns set in when the output increase from adding one more unit of input decreases compared to the increase from the previous unit of input. Assuming Exhibit 21-3 shows this happening with the fourth unit, that's when diminishing marginal returns begin.

Exhibit 21-3 ​

Exhibit 21-3