If a firm is experiencing diminishing marginal returns, then _____.
A)total output decreases as all resources are increased
B)total output decreases as all resources are decreased
C)total output decreases as one variable resource is increased, other things constant
D)additional increments of output diminish as one variable resource is increased, other things constant
E)additional increments of output diminish as all variable resources are increased

Question

​If a firm is experiencing diminishing marginal returns, then _____.
A)total output decreases as all resources are increased
B)total output decreases as all resources are decreased
C)total output decreases as one variable resource is increased, other things constant
D)additional increments of output diminish as one variable resource is increased, other things constant
E)additional increments of output diminish as all variable resources are increased

Quizplus · Accepted Answer

Diminishing marginal returns occur when the addition of one variable input leads to smaller increments in output. This means that as one variable resource (such as labor) is increased while all other factors remain constant, the additional output produced by each unit of that resource decreases. Therefore, option D is the correct choice.

​If a Firm Is Experiencing Diminishing Marginal Returns, Then _____

If a Firm Is Experiencing Diminishing Marginal Returns, Then _____