The law of diminishing marginal returns is
A)the same concept as economies of scale .
B)another name for the law of diminishing marginal utility .
C)important for long-run economic analysis.
D)relevant to the production of goods, but not services.
E)important for short-run economic analysis.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns is important for short-run economic analysis because it explains how increasing the quantity of one input (such as labor) while holding all other inputs constant will eventually lead to decreasing marginal product (output). This is a short-run concept because in the long run, firms can adjust all inputs and avoid diminishing marginal returns.

The Law of Diminishing Marginal Returns Is