The law of diminishing marginal returns states that
A)long-run average cost declines as output increases
B)if the marginal product is above the average product, the average will rise
C)as units of a variable input are added to a given amount of fixed inputs, the marginal product of the variable input eventually diminishes
D)as a person consumes more of a good, the marginal satisfaction from that good eventually diminishes
E)if marginal product is positive, total product rises

Question

Quizplus · Accepted Answer

The law of diminishing marginal returns states that as units of a variable input (such as labor) are added to a given amount of fixed inputs (such as capital or land), the marginal product of the variable input will eventually diminish. This means that the additional output generated from each additional unit of the variable input will decrease after a certain point, leading to less efficient production. This law is important for firms to consider when determining how many units of a variable input to hire or use in production.

The Law of Diminishing Marginal Returns States That