The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3

-When more and more units of a variable factor are combined with constant amount of a fixed factor, such that the variable factor becomes abundant compared to the fixed factor, the output will eventually:

Question

The below figure shows the various combinations of the goods X and Y that yield different levels of utility.Figure 7.3
 
-When more and more units of a variable factor are combined with constant amount of a fixed factor, such that the variable factor becomes abundant compared to the fixed factor, the output will eventually:

Quizplus · Accepted Answer

This is known as the law of diminishing marginal returns. As more of the variable factor is added, eventually the fixed factor becomes a bottleneck and the additional units of the variable factor become less productive. Therefore, the output will increase at a diminishing rate.

The Below Figure Shows the Various Combinations of the Goods