The law of diminishing marginal returns states that as
A) a firm uses more of a variable input, given the quantity of fixed inputs, the marginal product of the variable input eventually diminishes.
B) a firm uses more of a variable input, given the quantity of fixed inputs, the firm's average total cost will decrease eventually.
C) the size of a plant increases, the firm's fixed costs decrease.
D) the size of a plant increases, the firm's fixed costs increase.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns refers to the point at which the marginal product of an additional unit of input decreases as the quantity of that input increases, holding the level of all other inputs constant. This concept does not directly relate to the firm's average total cost or the change in fixed costs with the size of the plant.

The Law of Diminishing Marginal Returns States That as