As the quantity of a variable input increases, the resulting rate of output increase eventually:

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Quizplus · Accepted Answer

This is due to the law of diminishing marginal returns. Initially, as more of a variable input (such as labor) is added to a fixed amount of capital, the rate of output increases at an increasing rate (called the stage of increasing returns). However, beyond a certain point, adding more of the variable input leads to a decreasing rate of output increase (called the stage of diminishing returns). This is because the fixed amount of capital becomes a constraint on the production process and leads to inefficiencies and diminishing returns.

As the Quantity of a Variable Input Increases, the Resulting