When the law of diminishing returns sets in,
A) total costs increase at a decreasing rate
B) total costs increase at a constant rate
C) marginal costs increase
D) marginal costs decrease

Question

Quizplus · Accepted Answer

The law of diminishing returns indicates that as more units of a variable input are added to fixed inputs, the additional output from each new unit of input will eventually decrease. This leads to an increase in the cost of producing each additional unit, or in other words, marginal costs increase.

When the Law of Diminishing Returns Sets In