Diminishing marginal returns occur only in the long run.

Question

Quizplus · Accepted Answer

Diminishing marginal returns can occur in both the short run and the long run. In the short run, there may be a fixed factor of production that limits the output, leading to diminishing returns as more of the variable input is added. In the long run, all factors of production can be adjusted, allowing for potentially increasing returns to scale before eventually reaching diminishing returns.

Diminishing Marginal Returns Occur Only in the Long Run