The law of diminishing marginal product indicates that
A) average product will eventually decrease.
B) marginal product will eventually decrease.
C) total product will eventually decrease.
D) resources are inefficient.

Question

Quizplus · Accepted Answer

The law of diminishing marginal product states that as more units of a variable input are added to a fixed input, the marginal product of the variable input will eventually decrease. This is due to the fact that the fixed input (such as land or capital) cannot be increased beyond a certain point, leading to diminishing returns. As more units of the variable input (such as labor) are added, productivity will initially increase, but eventually, a point will be reached where additional units of the variable input will result in smaller and smaller increases in output, leading to diminishing marginal productivity. Therefore, choice B is the correct answer.

The Law of Diminishing Marginal Product Indicates That