When a firm's marginal productivity of an input eventually declines as the quantity of input increases,then the production is experiencing
A)Diminishing returns to scale
B)Diminishing marginal product
C)Increasing returns to scale
D)Increasing marginal product

Question

Quizplus · Accepted Answer

When the marginal productivity of an input declines as the quantity of input increases, it indicates that the production is experiencing diminishing marginal product. This can occur when a firm adds more units of a variable input, such as labor or capital, to a fixed amount of another input, such as land or machinery. Eventually, each additional unit of the variable input leads to a relatively smaller increase in output, indicating diminishing returns to that input.

When a Firm's Marginal Productivity of an Input Eventually Declines