The law of diminishing returns holds only:
A)for goods with inelastic demand.
B)when one input is fixed.
C)in the long run.
D)in a competitive market.

Question

Quizplus · Accepted Answer

The law of diminishing returns holds when one input is fixed, meaning that as one input is increased while the others are held constant, there is a point at which the increase in output begins to decrease. This is also known as the law of diminishing marginal product. It is not related to the elasticity of demand, the time horizon, or market structure.

The Law of Diminishing Returns Holds Only