For the law of diminishing returns to be present, we must have:

Question

Quizplus · Accepted Answer

The law of diminishing returns states that as more units of a variable input (such as labor) are added to a fixed input (such as capital), eventually the marginal product (additional output) of the variable input will decrease. Therefore, for the law of diminishing returns to be present, there must be at least one fixed factor of production (Answer A). Additionally, Answer B and C are incorrect, as output may initially increase as more labor is hired, and the price of labor may not necessarily increase as more workers are hired. Answer D is also incorrect, as the law of diminishing returns can occur with just changes in labor, without any changes in capital.

For the Law of Diminishing Returns to Be Present, We