Diminishing marginal returns occurs as a firm adds more variable inputs to at least one fixed input because
A)the ability or quality of the variable inputs hired decreases as more of them are hired.
B)the firm must lower the price of its product when it produces more units of output.
C)the per unit cost it must pay for variable inputs increases as more inputs are hired.
D)as more variable inputs are hired, the amount of the fixed input per unit of variable input decreases.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur because, as more variable inputs (like labor) are added to a fixed input (like machinery or land), each additional unit of the variable input has less of the fixed input to work with, leading to decreases in the marginal productivity of the variable input.

Diminishing Marginal Returns Occurs as a Firm Adds More Variable