The law of diminishing marginal returns implies that, in the short run:
A) output must fall beyond a certain point.
B) price must fall beyond a certain point.
C) the marginal product of the variable input must eventually decrease.
D) wages of workers must eventually increase.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns says that as more of a variable input is added to a fixed amount of inputs, the marginal product of the variable input will eventually decrease. This means that the overall output may still increase, but at a decreasing rate. Option A is incorrect because output can still increase, just at a decreasing rate. Option B is incorrect because the law of diminishing marginal returns does not affect price directly. Option D is incorrect because there is no clear relationship between the law of diminishing marginal returns and wages of workers.

The Law of Diminishing Marginal Returns Implies That, in the Short