Diminishing marginal returns for the first four units of a variable input is exhibited by the total product sequence:
A) 5, 4, 3, 2.
B) 5, 5, 5, 5.
C) 5, 9, 12, 14.
D) 5, 10, 15, 20.

Question

Quizplus · Accepted Answer

Diminishing marginal returns occur when the incremental increase in output decreases as more units of a variable input are added. In option C, the total product increases by 4, then 3, then 2, showing a decreasing rate of output increase, which is indicative of diminishing marginal returns.

Diminishing Marginal Returns for the First Four Units of a Variable