Which of the following statements best expresses the law of diminishing marginal returns?
A)Because large-scale production allows the realization of increasing returns to scale, the costs of production vary directly with the level of output.
B)Population growth automatically adjusts to that level at which the average product per worker will be at a maximum.
C)As successive amounts of one resource (labour) are added to fixed amounts of other resources, beyond some point the resulting extra output will decline.
D)The same percentage increase in all inputs will result in a lower percentage increase in total output.
E)The same percentage increase in all inputs will result in a higher percentage increase in total output.

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as successive amounts of one resource (labor) are added to fixed amounts of other resources, beyond some point, the resulting extra output will decline. This means that the additional output gained from adding more labor will become smaller and smaller, eventually leading to negative returns. Option C states this concept most accurately. Options A and D both refer to economies of scale, which are different from the law of diminishing marginal returns. Option B is incorrect as population growth isn't necessarily related to the law of diminishing marginal returns. Option E is also incorrect, as it suggests that the relationship between input and output is not affected by the law of diminishing marginal returns.

Which of the Following Statements Best Expresses the Law of Diminishing